Federal Reserve Chairman Jerome Powell
Biden Keeps Powell as Fed Chair, Elevates Brainard to Vice Chair
President Biden will keep Jerome Powell as Fed chair, resisting political pressure for a shake-up.
Lael Brainard is tapped for vice chair of the Federal Reserve.
Who is Lael Brainard, President Biden’s pick for the Fed’s vice chair?
President Biden will renominate Jerome H. Powell, the Federal Reserve chair, to another four-year term — ensuring policy continuity at a moment of rapid inflation and vast economic uncertainty but potentially angering progressive Democrats who had been agitating for a change in leadership.
The much-awaited decision was a return to tradition in which the central bank’s top official is reappointed regardless of partisan identity — a norm bucked by former President Donald J. Trump, who appointed Mr. Powell instead of renominating Janet L. Yellen.
President Biden said he would nominate Lael Brainard as the Federal Reserve’s vice chair, the No. 2 role at the Fed and one that could give her a stronger mandate to influence everything from the cost of money to the future of digital cash.
Ms. Brainard, who has been a Fed governor since 2014, is already part of the close inner circle of policy advisers of Jerome. H. Powell, the Fed chair. But her elevation to vice chair will make her Mr. Powell’s closest collaborator on monetary policy matters if she is confirmed by the Senate.
The vice chair holds little power officially, but in practice is regularly the person who floats new ideas in speeches and who helps to guide a Fed chair’s thinking on policy matters.
Lael Brainard, a Federal Reserve governor since 2014, was in the mix to potentially replace Jerome H. Powell as Fed chair, but President Biden’s decision to elevate her to the Fed’s No. 2 role will still place her in a powerful position at the central bank.
If confirmed as vice chair, Ms. Brainard would be the third woman in the Fed’s 108-year history to serve in the role after Janet L. Yellen and Alice Rivlin. Her term would begin in February 2022, after the departure of Richard Clarida, the current vice chair.
Biden To Re-Nominate Jerome Powell To Serve As Federal Reserve Chairman
President Biden has announced that he intends to re-nominate Jerome Powell to serve another term as Federal Reserve chairman. NBC’s Shannon Pettypiece reports from the White House.
Federal Reserve Chairman Jerome Powell on Twitter :
Jerome Powell
(born February 4, 1953)
Jerome Hayden Powell, also known as “Jay”, is the 16th chair of the Federal Reserve, serving in that office since February 2018.
He was nominated to the Board of Governors in 2012 by President Barack Obama, and subsequently nominated as chair by President Donald Trump, confirmed in each case by the United States Senate.
Biden nominates Powell for second term as Fed chief, opting for continuity, and names Brainard vice chair
President Biden on Monday nominated Federal Reserve Chair Jerome Powell, a Republican, for a second four-year term, opting to stick with the powerful head of the central bank who helped lift the U.S. economy out of the COVID-19 recession and who enjoys strong bipartisan support.
Biden also nominated Democrat Fed Governor Lael Brainard as vice-chair of the Fed’s board of governors, succeeding Republican Richard Clarida.
The decision caps a weekslong race between Powell and Brainard, a Democrat, for the nation’s top economic post. Biden reportedly considered Brainard more seriously in recent days under pressure from progressive Democrats after Powell initially seemed a shoo-in. Brainard has taken a tougher stance than Powell on banking regulation.
“While there’s still more to be done, we’ve made remarkable progress over the last 10 months in getting Americans back to work and getting our economy moving again,” Biden said in a statement. “That success is a testament to the economic agenda I’ve pursued and to the decisive action that the Federal Reserve has taken under Chair Powell and Dr. Brainard to help steer us through the worst downturn in modern American history and put us on the path to recovery.”
The nomination comes at a critical juncture for the reopening economy, with inflation notching its biggest jump in inflation in three decades last month even as growth is slowing from its torrid pace earlier this year amid COVID spikes driven by the delta variant.
The stock market rose following the news, with the Dow Jones industrial average rising 262 points, or 0.7%, to 35,865, in early Monday trading.
The Fed closely tracks inflation and is responsible for keeping consumer prices stable while also pushing for full employment.
The coming months could see central bank policymakers forced to make difficult policy decisions as they seek to balance the contrasting goals; although inflation is currently at a 31-year high, the labor market – despite a faster-than-expected recovery, with unemployment tumbling from 14.6% in March 2020 to 4.6% in October 2021 – has not yet returned to pre-pandemic levels.
Fed officials began slowing their massive bond-purchase program this month, the first step toward unwinding the unprecedented amount of fiscal support for the U.S. economy during the pandemic. Powell has previously signaled the Fed will conclude tapering the $120 billion monthly bond purchases before moving to raise interest rates from their rock-bottom level.
Members of Biden’s economic team, including Treasury Secretary Janet Yellen, favored Powell for a second term after he steered the U.S. through the coronavirus pandemic. Biden, in making the decision, lauded Powell for the “decisive” action the central bank took in the early days of the pandemic, which many economists credited with staving off a deeper and more painful downturn.
But the move is sure to infuriate some progressive lawmakers, who had urged Biden to replace Powell with a candidate more focused on mitigating climate change risks and who favored stricter bank regulation. Under Powell, the Fed reduced certain regulations on big banks, including making it easier for them to make risky trades and easing tests that examine if they could withstand another major economic downturn.
The left was also critical of a trading scandal that forced two top Fed officials to resign and Powell to overhaul the central bank’s conflict-of-interest rules in order to contain the controversy.
Sen. Elizabeth Warren called Powell, to his face, a “dangerous man” and pledged to oppose him if he were renominated. Sens. Sheldon Whitehouse of Rhode Island and Jeff Merkley of Oregon also released a statement on Friday opposing Powell’s reappointment.
A source familiar with the matter told FOX Business that Biden and his administration have regularly engaged with a wide range of lawmakers and stakeholders on the matter, including both progressive and moderate Democrats on Capitol Hill. Biden met with Warren at the White House to gather her input on this decision, and has been in close contact with Senate Finance Chairman Sherrod Brown, D-Ohio.
Biden picks Jerome Powell to lead the Fed for a second term as the U.S. battles Covid and inflation
“Chair Powell has provided steady leadership during an unprecedently challenging period, including the biggest economic downturn in modern history and attacks on the independence of the Federal Reserve,” a White House statement said. “During that time, Lael Brainard – one of our country’s leading macroeconomists – has played a key leadership role at the Federal Reserve, working with Powell to help power our country’s robust economic recovery.”
Controversy in recent days
Though Powell carried the day, it was not without controversy.
The Fed has been under fire lately following an ethics scandal in which multiple officials engaged in trading stocks at a time when the institution was implementing policies aimed at boosting markets. Powell disclosed that he owned municipal bonds, which the Fed also was buying, and he also bought and sold funds tied to the broad stock market indexes.
At the same time, the Fed has been hit with inflation running faster than it had anticipated – in fact, at the sharpest pace in 30 years. Official Fed policy since September 2020 has been to let inflation run somewhat hotter than the standard 2% target if it allows for full and inclusive employment, but prices have been rising well above that level.
Battling back from Covid
President Donald Trump appointed Powell to the position in 2018 in somewhat of a surprise. Trump chose to pass over then-Chair Janet Yellen, an unusual move in that Fed leaders are rarely removed after just one term. Former President Barack Obama initially appointed Powell to a 14-year term as governor in 2014.
Though Trump nominated Powell, he later fired withering criticism at the Fed chief when the central bank raised interest rates seven times in 2017 and 2018. The former president went as far as to call the Fed policymakers “boneheads” for trying to normalize policy as the economy recovered.
As for Brainard, she is now widely expected to be named vice chair of supervision, a key Fed post to oversee the nation’s banking system.
Powell has faced opposition from progressives
Progressive critics, including Sen. Elizabeth Warren, D-Mass., have accused Powell of watering down bank regulations adopted in the aftermath of the financial crisis. At a recent Senate Banking Committee hearing, Warren described Powell as “a dangerous man.”
That criticism failed to get much traction, though. The co-sponsors of the Dodd-Frank law behind those bank regulations, former Sen. Chris Dodd, D-Conn., and former Rep. Barney Frank, D-Mass., have defended Powell and said he deserves a second term.
Powell has also had to navigate an ethics controversy after reports this fall that two former presidents of regional Federal Reserve banks actively traded stocks and other securities last year, at a time when the central bank was heavily involved in financial markets.
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