WASHINGTON (Reuters) - Randal Quarles, the top Federal Reserve official tasked with policing Wall Street, said on Friday that he would recuse himself from any matters concerning Wells Fargo & Co, the nation’s third largest bank.
Wells Fargo, which last year paid $190 million to settle a phony accounts scandal, is under investigation by two other financial agencies over whether the bank charged its customers too much for auto insurance and mortgages.
Quarles, who joined the Fed on October 13, is regarded as the country’s top banking regulator and will be a critical voice as the central bank rethinks how it approaches bank supervision.
He said in a memo that he and his family had sold their financial interests in Wells Fargo, and repaid a business loan to the bank - meaning he was legally allowed to oversee the lender.
But the former Wall Street lawyer and private equity investor said he would still bow out from all Fed decisions on the bank.
“I have made this decision in order to avoid even the appearance of a conflict,” Quarles wrote the Fed’s chief counsel Mark Van Der Weide.
A Wells Fargo spokeswoman declined to comment on Quarles’ recusal.
Quarles has ties to Wells Fargo through his father-in-law, Spencer Eccles.
Eccles was the head of First Security Corporation when the Utah bank was bought out by Wells Fargo in a $2.9 billion deal in 2000. Since then, Eccles has held a non-executive position with Wells Fargo, according to several online biographies.
“Mr. Eccles is Chairman Emeritus of the Intermountain Banking Region of Wells Fargo & Co.”, according to an online biography of trustees for Intermountain Healthcare, a nonprofit based in Salt Lake City.
The Wells Fargo spokeswoman declined to make any comment on the position of chairman emeritus.
A Federal Reserve spokesman said the emeritus title was honorary and that Eccles has no formal role at the bank.
In September, the New York Federal Reserve faulted its president William Dudley for not disclosing that his sister-in-law worked for Wells Fargo.
Conflicts of interest have long been a point of contention between those who argue regulators benefit from hiring people with real-world experience, and critics who say the revolving door makes it impossible to regulate effectively.
That debate has heightened under U.S. President Donald Trump, who has stocked his administration with former business executives, and pledged to slash regulations.
Reporting by Patrick Rucker; editing by Chizu Nomiyama