President Biden will renominate Jerome Powell to lead the Federal Reserve for another four-year term, signaling a vote of confidence for the Republican chair but angering progressive Democrats who wanted to reshape the top banking cop with Lael Brainard due to her aggressive views on climate issues and opposing loose regulations on large banks.
The decision capped off months of speculation over the top two selections Biden would tap to steer the nation’s most influential economic body at a time the country faces prices rising at the fastest pace in decades. In a Monday announcement, Biden also said he would nominate Brainard, the Fed board’s lone Democrat, to be the central bank’s vice-chair. Brainard will succeed Richard Clarida, whose term expires on Jan. 31, 2022.
“While there’s still more to be done, we’ve made remarkable progress over the last ten months in getting Americans back to work and getting our economy moving again. 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,” Biden said in a statement Monday morning.
“I’m confident that Chair Powell and Dr. Brainard’s focus on keeping inflation low, prices stable, and delivering full employment will make our economy stronger than ever before,” Biden added.
“Fundamentally, if we want to continue to build on the economic success of this year, we need stability and independence at the Federal Reserve – and I have full confidence after their trial by fire over the last 20 months that Chair Powell and Dr. Brainard will provide the strong leadership our country needs.”
The nominations now head to the Senate for confirmation. In his first Senate confirmation in 2018, Powell was confirmed by a vote of 84-13. Out of the 84 lawmakers who voted to confirm Powell, 68 of those Senators are still in office, equally split between the two sides.
Powell, who was first tapped as Fed chair by former President Donald Trump, is expected to face a tense confirmation process this time around. While progressive lawmakers recognized that Powell has “made positive changes” and praised his emphasis on full employment, they also pushed Biden to appoint someone more aggressive on financial regulation and climate change.
Progressives, who opposed Powell including, Sen. Elizabeth Warren (D-MA), have been very outspoken for his renomination and ratcheted up pressure against his selection to Biden economic officials after two now regional Fed bank presidents made multiple million-dollar-plus stock trades in 2020 after the Fed itself has poured trillions of dollars into financial markets during the pandemic.
During a Senate Banking Committee hearing in late September, Warren explicitly called Powell a “dangerous man” and pledged to oppose his renomination for a second term after addressing concerns over his deregulatory efforts as Federal Reserve chair.
Squad members — Reps. Alexandria Ocasio-Cortez (D-NY), Rashida Tlaib (D-MI), and Ayanna Pressley (D-MA) in a joint statement also called on Biden to dump Powell and select one who will “re-imagine” the Fed chair role that will focus on “eliminating climate risk and advancing racial and economic justice.”
Those who wanted Powell’s not to be renominated were pushing Biden to select Brainard; a selection Progressive wanted due to her opposed policies to loosen regulations for large banks and her consistently warning on how climate change can hinder economic activity and how big banks’ exposure to climate-related risks could threaten the broader financial system.
A source familiar with Biden’s decision-making process said the president spoke with Powell and Brainard about his decision on Friday. Biden, according to the source who spoke to The Floridian after the announcement, said the president was genuinely impressed by Brainard but valued having continuity, which gave Powell a leg up as he wanted an easier and faster confirmation process.
Shortly after Biden’s announcement, the top-ranking members of the Senate Banking Committee, Sherrod Brown (D-OH) and Pat Toomey (R-PA) released statements showing their support for Powell.
“When the pandemic hit in 2020, Chairman Powell acted swiftly and took extraordinary and necessary steps to help stabilize financial markets and the economy,” Toomey, the ranking member of the Senate Finance Committee, said in a statement on Monday morning. “I look forward to supporting his confirmation.”
Biden will soon be able to fill three more vacancies on the central bank’s seven-member board of governors, putting his stamp on the Fed.
Stocks moved higher Monday morning before the opening bell after the announcement of Powell’s renomination.