Aiming to avoid “even the potential appearance of a conflict of interest,” Federal Reserve Vice Chairman will recuse himself from matters involving Wells Fargo, the Fed announced Friday.
A letter from Quarles states that he sold all of his stock in Wells Fargo after being confirmed as a Fed governor, but Quarles said he is taking this “voluntary” step even though he is not legally required to avoid questions about impartiality given his family’s history with the bank.
“Before I took the oath of office as a Board member, and consistent with my Ethics Agreement, I sold all of my Wells Fargo stock, as did my spouse and various family trusts for the benefit of my spouse and children,” Quarles said in the letter to Fed general counsel.
“In addition, I repaid a business line of credit with Wells Fargo,” Quarles continued. “As a result, since my spouse, my children and I no longer have a financial interest in or business loans from Wells Fargo, you have advised me that I may legally participate in any Federal Reserve matter affecting that institution.”
But the issue is his “extended family’s history” with Wells Fargo.
“(I)n light of my extended family’s history with Wells Fargo in connection with the prior sale of their interest in a bank, I have decided to voluntarily recuse myself from participating by advice, decision or recommendation in any Federal Reserve matter involving a specific party in which Wells Fargo is or represents a party,” Quarles said.
As a result of Quarles’ decision, he will not vote on, or participate by decision or recommendation in, matters specifically involving Wells Fargo, the Fed said.
“I have made this decision in order to avoid even the appearance of a conflict of interest and any risk that the integrity of the Board’s decision-making process in such matters might be questioned,” Quarles said.
According to the Fed announcement, Quarles will continue to oversee the board's supervision and regulation responsibilities as vice chairman for supervision, a role that many consider to be the most powerful in banking.
As vice chair of supervision, Quarles will lead the development of supervisory policies and rules applicable to banking organizations.