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Nominations of Joseph Otting and Randal Quarles Hearing Committee on Banking, Housing, and Urban Affairs United States Senate

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Nominations of Joseph Otting and Randal Quarles Hearing Committee on Banking, Housing, and Urban Affairs United States Senate S. HRG. 115–133 NOMINATIONS OF JOSEPH OTTING AND RANDAL QUARLES HEARING BEFORE THE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS UNITED STATES SENATE ONE HUNDRED FIFTEENTH CONGRESS FIRST SESSION ON THE NOMINATIONS OF: JOSEPH OTTING, OF NEVADA, TO BE COMPTROLLER OF THE CURRENCY, OFFICE OF THE COMPTROLLER OF THE CURRENCY RANDAL QUARLES, OF COLORADO, TO BE A MEMBER OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, AND VICE CHAIRMAN FOR SUPERVISION, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM JULY 27, 2017 Printed for the use of the Committee on Banking, Housing, and Urban Affairs ( Available at: http://www.govinfo.gov/ U.S. GOVERNMENT PUBLISHING OFFICE 28–282 PDF WASHINGTON : 2018 For sale by the Superintendent of Documents, U.S. Government Publishing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 13:17 Mar 27, 2018 Jkt 046629 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 S:\DOCS\28282.TXT SHERYL COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS MIKE CRAPO, Idaho, Chairman RICHARD C. SHELBY, Alabama SHERROD BROWN, Ohio BOB CORKER, Tennessee JACK REED, Rhode Island PATRICK J. TOOMEY, Pennsylvania ROBERT MENENDEZ, New Jersey DEAN HELLER, Nevada JON TESTER, Montana TIM SCOTT, South Carolina MARK R. WARNER, Virginia BEN SASSE, Nebraska ELIZABETH WARREN, Massachusetts TOM COTTON, Arkansas HEIDI HEITKAMP, North Dakota MIKE ROUNDS, South Dakota JOE DONNELLY, Indiana DAVID PERDUE, Georgia BRIAN SCHATZ, Hawaii THOM TILLIS, North Carolina CHRIS VAN HOLLEN, Maryland JOHN KENNEDY, Louisiana CATHERINE CORTEZ MASTO, Nevada GREGG RICHARD, Staff Director MARK POWDEN, Democratic Staff Director ELAD ROISMAN, Chief Counsel JOE CARAPIET, Senior Counsel GRAHAM STEELE, Democratic Chief Counsel LAURA SWANSON, Democratic Deputy Staff Director DAWN RATLIFF, Chief Clerk CAMERON RICKER, Hearing Clerk SHELVIN SIMMONS, IT Director JIM CROWELL, Editor (II) VerDate Nov 24 2008 13:17 Mar 27, 2018 Jkt 046629 PO 00000 Frm 00002 Fmt 0486 Sfmt 0486 S:\DOCS\28282.TXT SHERYL CONTENTS THURSDAY, JULY 27, 2017 Page Opening statement of Chairman Crapo ................................................................. 1 Opening statements, comments, or prepared statements of: Senator Shelby .................................................................................................. 1 Senator Brown .................................................................................................. 2 WITNESSES Richard Burr, Senator from the State of North Carolina .................................... 1 NOMINEES Joseph Otting, of Nevada, to be Comptroller of the Currency, Office of the Comptroller of the Currency ............................................................................... 5 Prepared statement .......................................................................................... 36 Biographical sketch of nominee ....................................................................... 38 Responses to written questions of: Senator Brown ........................................................................................... 59 Senator Sasse ............................................................................................ 66 Senator Reed .............................................................................................. 70 Senator Menendez ..................................................................................... 71 Senator Heitkamp ..................................................................................... 72 Senator Schatz ........................................................................................... 74 Senator Cortez Masto ................................................................................ 76 Randal Quarles, of Colorado, to be a Member of the Board of Governors of the Federal Reserve System, and Vice Chairman for Supervision, Board of Governors of the Federal Reserve System ..................................................... 6 Prepared statement .......................................................................................... 46 Biographical sketch of nominee ....................................................................... 47 Responses to written questions of: Senator Brown ........................................................................................... 79 Senator Sasse ............................................................................................ 88 Senator Reed .............................................................................................. 90 Senator Menendez ..................................................................................... 92 Senator Heitkamp ..................................................................................... 94 Senator Schatz ........................................................................................... 97 Senator Cortez Masto ................................................................................ 98 ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD Letters submitted in support of the nomination of Joseph Otting ...................... 115 Letter submitted in support of the nominations of Joseph Otting and Randal Quarles .................................................................................................................. 121 (III) VerDate Nov 24 2008 13:17 Mar 27, 2018 Jkt 046629 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 S:\DOCS\28282.TXT SHERYL VerDate Nov 24 2008 13:17 Mar 27, 2018 Jkt 046629 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 S:\DOCS\28282.TXT SHERYL NOMINATIONS OF JOSEPH OTTING AND RANDAL QUARLES THURSDAY, JULY 27, 2017 U.S. SENATE, COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS Washington, DC. The Committee met at 9:59 a.m., in room SD–538, Dirksen Sen- ate Office Building, Hon. Michael Crapo, Chairman of the Com- mittee, presiding. Chairman CRAPO. And would the witnesses for our hearing please come and take their seats, and while they are doing that, Senator Shelby cannot be here for his questioning time, and so he has asked for just like a minute to make a quick statement. STATEMENT OF SENATOR RICHARD C. SHELBY Senator SHELBY. Mr. Chairman, I will be real quick today. I just want to say I will not be here. I have got to preside over an appropriations hearing, but I believe that the President has sent us two good nominees. One, we have waited a long time on the Vice Chairman of Supervision for the Fed—Mr. Quarles, Mr. Otting—and I think they are outstanding nominees. I hope that you—the hearing goes well and we can expedite these nominees and get them in place. Thank you. Chairman CRAPO. Thank you, Senator Shelby. All right. The hearing will come to order. OPENING STATEMENT OF CHAIRMAN MIKE CRAPO This morning we will consider the nominations of Mr. Joseph Otting to be Comptroller of the Currency and the Honorable Randal Quarles to be a Member of the Board of Governors of the Federal Reserve System and Vice Chairman for Supervision of the Board of Governors of the Federal Reserve System. Welcome to both of you. Mr. OTTING. Thank you. Chairman CRAPO. And congratulations to you on your nomina- tions to these important offices. I see that you have friends and family sitting with you, and I welcome them here today as well. These two positions are critically important to ensuring a safe, sound, and vibrant financial system, and we are fortunate to have two highly qualified individuals to consider for these posts. Mr. Otting brings a particular expertise and understanding of our banking system from a long career in financial services. As (1) VerDate Nov 24 2008 13:17 Mar 27, 2018 Jkt 046629 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 S:\DOCS\28282.TXT SHERYL 2 head of the OCC, Mr. Otting would oversee supervision of all national banks and Federal savings associations as well as Federal branches and agencies of foreign banks. Having served in leader- ship positions at various financial institutions in the past, I am confident that Mr. Otting will bring strong leadership to the OCC. Mr. Quarles has a wealth of government and private-sector expe- rience as well dealing with both domestic and international finan- cial markets. He is no stranger to public service, having previously served in multiple top posts in the Treasury Department. As Vice Chairman for Supervision, Mr. Quarles would play a key role in de- veloping regulatory and supervisory policy for the Federal Reserve System. President Obama never designated anyone for this role. Instead, former Fed Governor Dan Tarullo acted as the de facto Vice Chair- man for Supervision in various ways, including by chairing the Federal Reserve Board’s Committee on Supervision and Regulation, overseeing the Large Institution Supervision Coordinating Com- mittee, and representing the Fed at the Financial Stability Board and in Basel, among other functions. In February, Chair Yellen committed in a hearing that she ex- pected President Trump’s nominee for Vice Chairman for Super- vision will have the same responsibilities that Governor Tarullo had, including heading the Federal Reserve’s Committee on Supervision and Regulation and rep- resenting the Fed at the Financial Stability Board and in Basel. I look forward to working with Mr. Quarles in this effort. Congratulations again on your nominations, and thank you and your families for your willingness to serve. Senator Brown. STATEMENT OF SENATOR SHERROD BROWN Senator BROWN. Thank you, Mr. Chairman, and welcome to the witnesses. I appreciate
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