Appointments and Executive Changes

More stories

  • 100 Shares149 Views

    in Economy

    Senate Republicans Stall Crucial Vote on Fed Nominees

    by

    President Biden’s plans to reshape the Federal Reserve suffered a setback on Tuesday as Republicans delayed a key vote on his five nominees for its Board of Governors.Republicans did not show up for a committee decision that would have advanced the nominees to the full Senate for a confirmation vote. Because a majority of the Senate Banking Committee’s members need to be physically present for such votes to count, their blockade effectively halted the process.The unusual maneuver, spearheaded by Senator Patrick J. Toomey of Pennsylvania, was driven by Republican opposition to Mr. Biden’s pick for the nation’s top bank cop, Sarah Bloom Raskin.The president has renominated Jerome H. Powell as Fed chair and has tapped Lael Brainard, a current Fed governor, as vice chair. He has also nominated the economists Lisa D. Cook and Philip N. Jefferson as Fed governors. But Ms. Raskin — a longtime Washington policymaker and lawyer whom Mr. Biden has picked as vice chair for bank supervision — has garnered the most pushback.To prevent her nomination from advancing to the full Senate, Republicans held up the vote on all five nominees.Democrats and the White House criticized Republicans for engineering a boycott and scrambled for a solution that could get the nominees to a confirmation vote. Senator Sherrod Brown, Democrat of Ohio and chair of the Banking Committee, on Tuesday shot down the idea that he would separate Ms. Raskin from the other nominees to allow the rest to advance. Ms. Raskin could face tough odds of passing, especially on her own.By nominating five of the Fed’s seven governors and all of its highest-ranking leaders, Mr. Biden had a chance to shake up the institution. While some of his picks — like Mr. Powell — represented continuity, together they would have made up the most racially and gender-diverse Fed leadership team ever.Sarah Binder, a professor of political science at George Washington University who co-wrote a book on the politics of the Fed, said Democrats would need to come up with a strategy to overcome the Republican block or the nominees could get stuck in limbo.“It is really a delay — it might yet scupper Raskin,” she said. She noted that Democrats could break the nominations up or try to garner enough support among the full Senate to override the rules and get the nominees past the committee, though that might be a challenge.“It’s pretty uncharted, and they’re going to have to find a way,” Dr. Binder said.Molly Reynolds, a senior fellow in governance studies at the Brookings Institution, said that outside of trying to change Senate rules — which she called the “nuclear option” — Democrats’ clearest avenue was probably to negotiate with Republicans.“They just need a Republican to show up,” she noted, explaining that the senator would not even need to vote yes for the committee to secure a majority and move the candidates along.Tuesday’s maneuver was the latest step in Mr. Toomey’s opposition campaign against Ms. Raskin, who would serve as arguably the nation’s most important bank regulator if confirmed.Mr. Toomey has criticized Ms. Raskin for past comments on climate-related regulation, worrying that she would be too activist in bank oversight. More recently, he has pressed for more information about her interactions with the Fed while she was on the board of a financial technology company that was pushing for a potentially lucrative central bank account.“Until basic questions have been adequately addressed, I do not think the committee should proceed with a vote on Ms. Raskin,” Mr. Toomey said in the statement.White House officials criticized his move as inappropriate when the Fed is wrestling with rapidly rising prices and preparing to raise interest rates next month.“It’s totally irresponsible, in our view — it’s never been more important to have confirmed leadership at the Fed,” said Jen Psaki, the White House press secretary. She added that the administration’s focus now was moving the nominees through the committee and called Mr. Toomey’s probing of Ms. Raskin’s background “false allegations.”The dispute centers on the revolving door between government regulators and the arcane world of financial technology.Mr. Toomey and his colleagues have said Ms. Raskin, a former Fed and Treasury official, had contacted the Federal Reserve Bank of Kansas City on behalf of Reserve Trust, a financial technology company. Reserve Trust secured a strategically important account at the Fed while she was on its board: To this day, it advertises that it is the only company of its kind with what’s known as a “master” account.Master accounts give companies access to the U.S. payment system infrastructure, allowing firms to move money without working with a bank, among other advantages.Republicans are blocking the process over concerns about one of the nominees, Sarah Bloom Raskin.Pool photo by Ken CedenoMs. Raskin said in written responses to Mr. Toomey’s questions early this month that she did “not recall any communications I made to help Reserve Trust obtain a master account.” But Mr. Toomey said in a subsequent letter that the president of the Kansas City Fed, Esther George, had told his staff that Ms. Raskin called her about the account in 2017.The Kansas City Fed has insisted that it followed its normal protocol in granting Reserve Trust’s master account and noted that talking with a firm’s board members was “routine.” But Mr. Toomey has continued to push for more information.“Important questions about Ms. Raskin’s use of the ‘revolving door’ remain unanswered largely because of her repeated disingenuousness with the committee,” Mr. Toomey said in his statement Tuesday.Democrats have emphasized that Ms. Raskin recently committed to a new set of ethics standards, agreeing not to work for financial services companies for four years after she leaves government — a pledge Ms. Cook and Mr. Jefferson also made, at the urging of Senator Elizabeth Warren, Democrat of Massachusetts.Ms. Brainard agreed to a weaker version of that commitment that would bar her from working at bank holding companies and depository institutions outside of mission-driven exceptions like banks that target underserved communities, a spokesperson for Ms. Warren’s office said Tuesday.Mr. Powell declined to make a similar commitment, the spokesperson said. The Fed chair did signal that he would adhere to the administration’s ethics rules, which ban paid work related to government service for two years upon leaving office.On Tuesday, a dozen Republican chairs in the room where the committee met remained empty while Democrats occupied their seats across the room. Democrats took a vote to show support, though it was not binding, and Mr. Brown pledged to reschedule.“Few things we do as senators will do more to help address our country’s economic concerns more than to confirm this slate of nominees, the most diverse and most qualified slate of Fed nominees ever put forward,” Mr. Brown said, chiding Republicans for skipping the session.“They’re taking away probably the most important tool we have — and that’s the Federal Reserve — to combat inflation,” he later added.The Fed has four current governors, in addition to its 12 regional presidents, five of whom vote on monetary policy at any given time. Mr. Powell has already been serving as chair on an interim basis, since his leadership term officially expired this month. Even if the nominees advance, Ms. Raskin may struggle to pass the full Senate. Winning confirmation would require her to maintain full support from all 50 lawmakers who caucus with Democrats and for all those lawmakers to be present unless she can win Republican votes. Senator Ben Ray Luján, Democrat of New Mexico, has been absent as he recovers from a stroke.“The Republicans are playing hardball because they can,” said Ian Katz, the managing director at Capital Alpha Partners. “At the least, it delays her confirmation. It could have the ultimate effect of killing it.” More

  • 100 Shares149 Views

    in Economy

    Economist Susan M. Collins Will Lead Boston Fed

    by

    The Federal Reserve Bank of Boston has selected Susan M. Collins, a University of Michigan economist and administrator, as its new president — making her the first Black woman to lead a regional reserve bank in the Fed system’s 108-year history.Ms. Collins, who is a provost and executive vice president for academic affairs at the university, will be one of 12 regional reserve bank presidents within the Fed system and will vote on monetary policy in 2022.Ms. Collins identifies as Jamaican-American, and she will add to the diversity of the Fed at a moment when it is moving away from its heavily white and male makeup in the past.Lisa Cook, a Michigan State University economist who is also a Black woman, has been nominated as a Fed governor but has yet to be confirmed. Raphael Bostic, the Federal Reserve Bank of Atlanta president, was the first Black person ever to lead a reserve bank. Ms. Collins will start July 1, the Boston Fed said in its release, which will plunge her into the policy discussion at a challenging moment. Officials are trying to combat rapid price increases without choking off a robust economic rebound from the pandemic. Joblessness has fallen swiftly and wages are rising, though not quite enough to overcome the burst of inflation as supply chain issues spur shortages.“I look forward to helping the Bank and System pursue the Fed’s dual mandate from Congress — achieving price stability and maximum employment,” Ms. Collins said in the Boston Fed’s prepared release.Four regional central banks rotate in and out of rotating voting positions each year, while the Federal Reserve Bank of New York and members of the seven-seat Board of Governors in Washington hold a constant vote on monetary policy.The Fed is expected to raise interest rates, its main policy tool, several times this year to slow borrowing and spending, cooling off demand.Ms. Collins has had a wide-ranging economic career, including as a visiting scholar at the International Monetary Fund and as a staff member at the Council of Economic Advisers during the George H.W. Bush administration. Much of her research has focused on international economics.But she has at times spoken about monetary policy. In a 2015 article in The Detroit Free Press, she noted that it was difficult to be both reactive to incoming economic data and completely predictable. Locking in a preset pace of rate increases, she said, could set the market up for tumult if conditions changed.“The Fed wants to avoid surprising the market,” she said in the article.In a 2019 interview with Yahoo News, Ms. Collins said that the Fed should reassess how it was approaching the economy at a time when the link between unemployment and inflation was not as clear as expected. “The Fed is not in the business of making dramatic changes” to how it operates outside of crises, Ms. Collins said, but she noted that the Fed could in the future think about raising its inflation target above 2 percent. “Some of us think that being a little bit bolder there would be helpful,” she said. That could be relevant now, at a time when the Fed is trying to set policy against a virus-stricken and uncertain backdrop. Jerome H. Powell, the Fed chair, has emphasized that the central bank will be “humble” and “nimble.”Ms. Collins was selected by directors on the Boston Fed’s board and approved by the Fed’s Board of Governors in Washington. Ms. Collins will replace Eric S. Rosengren, who retired as the Boston Fed’s president last year following a trading scandal, citing health concerns.Ms. Collins has an undergraduate degree from Harvard University and a doctorate from the Massachusetts Institute of Technology. More

  • 100 Shares149 Views

    in Economy

    Sarah Bloom Raskin Faces a Contentious Senate Hearing

    by

    Sarah Bloom Raskin is a longtime Washington policy player with progressive credentials and a track record of speaking out against the fossil fuel industry, qualities that helped her to win the White House’s nomination to be America’s top bank cop.But those same views could leave her with a narrow path to confirmation as the Federal Reserve’s vice chair for supervision — especially if Senator Ben Ray Luján, a New Mexico Democrat who is recovering from a stroke, is not present for her vote before the full Senate. (A senior aide to Mr. Luján said he was expected to make a full recovery, and would return in four to six weeks, barring complications.)And Ms. Raskin’s views are almost certain to ignite sparks at her hearing before the Senate Banking Committee on Thursday.Ms. Raskin has been nominated alongside Lisa D. Cook and Philip N. Jefferson, both economists up for seats on the Fed’s Board of Governors. Ms. Raskin, Dr. Cook and Dr. Jefferson will field questions from the Senate Committee on Banking, Housing and Urban Affairs at 8:45 a.m. on Thursday.Ms. Raskin, a former Fed governor and high-ranking Treasury official who was most recently a professor at Duke Law School, is seen as a known entity by the banking industry that she would oversee. But business groups have been critical of her attention to climate issues — including an opinion piece she wrote in 2020 criticizing the Fed’s decision to design one of its emergency loan programs in a way that allowed fossil fuel companies to access emergency loans.“I’m deeply concerned that Sarah Bloom Raskin has — let’s be honest, she has explicitly, publicly advocated that the Fed use its powers to allocate capital,” Senator Patrick J. Toomey of Pennsylvania, the top Republican on the committee, said in an interview on Tuesday. “I think that’s disqualifying, and I think that is going to be a topic of discussion.”Such full-throated opposition from Republicans may mean more than just a heated hearing — Ms. Raskin may need to maintain the support of every Democrat in the Senate to stay on the narrow path to confirmation. If Democrats were to lose their fragile grasp on the Senate majority because Mr. Luján has not returned yet, it is not clear that she would garner the votes she would need to pass.Fed nominees need a simple majority to clear the Senate Banking Committee and then to win confirmation from the Senate as a whole, meaning that it is possible that Ms. Raskin could skate through if all 50 senators who caucus with Democrats vote in her favor, with Vice President Kamala Harris breaking a tie.Vice chair for supervision is arguably the most important job in American financial regulation, and given those high stakes, Ms. Raskin’s chances are being closely watched.“I’m not expecting her to get many, if any, Republican votes,” said Ian Katz, a managing director at Capital Alpha Partners, explaining that he thinks she will ultimately secure enough Democratic support to pass, assuming all the Senators, including Mr. Luján, vote. “You hear different things from the industry: You hear some concerns that she is too progressive, but you also hear that she’s well within the mainstream.”Oil and gas businesses are mounting a campaign against more decisive climate monitoring by the Fed, worried that the central bank will subject banks to stringent oversight that dissuades them from lending money to the industry. This could bring skeptical questioning for all three nominees.“I am concerned about all of the Fed nominees and their apparent willingness, despite what some of them said, to include bank and financial regulations designed to prohibit legal industries from operating in the United States borrowing money,” Senator Jerry Moran of Kansas, a Republican who sits on the committee, said on Wednesday.Mr. Toomey said during an interview on Wednesday that he also had some reservations about Dr. Cook.Lisa D. Cook, a Michigan State University economist well known for her work in trying to improve diversity in economics, will also face questions from the committee on Thursday.Brittany Greeson for The New York TimesMuch of the opposition coming from Republicans and lobbyists alike is aimed at Ms. Raskin, though. She argued in a Project Syndicate column recently that “all U.S. regulators can — and should — be looking at their existing powers and considering how they might be brought to bear on efforts to mitigate climate risk.”But Ms. Raskin struck a gentler tone in her prepared testimony for the hearing, released Wednesday night, noting that the role does not involve excluding certain sectors and asserting that bank supervisors must ensure that “the safety of banks and the resilience of our financial system are never compromised in favor of short-term political agendas or special interest groups.”It is unclear at this point whether those assurances will be enough for her critics.The Chamber of Commerce, in a letter to the Senate committee last week, urged lawmakers to ask Ms. Raskin about her position on whether the Fed’s regulatory approach should try to curb credit access for oil and gas companies. The business group asked whether Ms. Raskin would be independent of politics. After Democratic members of the Federal Deposit Insurance Corporation board clashed with and ultimately precipitated the resignation of the Trump appointee Jelena McWilliams, who was the regulator’s chairwoman, some Republicans have raised concerns that something similar could happen at the Fed. In December, partisan politics helped to scupper the nomination of Saule Omarova, who withdrew herself from consideration to be comptroller of the currency after attacks from Republicans and banking lobbyists, and as she struggled to draw wide enough support from Democrats.By contrast, the banking industry has taken a more benign view of Ms. Raskin. The Financial Services Forum, which represents the chief executive officers of the largest banks, congratulated Ms. Raskin and the other White House Fed picks in a statement after their nominations were announced, as did the American Bankers Association.Ms. Raskin is seen as a qualified candidate who understands the roles various regulators play in overseeing banks, according to one banking industry executive who asked not to be identified discussing regulatory matters. Even though bankers expect Ms. Raskin to be confirmed, they are awaiting more clarity around her stance on climate finance and disclosures, the executive said.As she is received as a mainstream pick, centrist Democrats have sounded content with Ms. Raskin.“I’ve been very impressed with her,” Senator Mark Warner, Democrat of Virginia, said on Tuesday, adding that he had not met her yet but that he was “favorably inclined” and noting that banks have expressed comfort with her.Senator Joe Manchin III from West Virginia, a key centrist Democrat, said on Wednesday that he hadn’t yet studied the nominees, adding that he’s “going to get into that” because he’s “very concerned” about issues including inflation.A Harvard-trained lawyer, Ms. Raskin is a former deputy secretary at the Treasury Department, where she focused on financial system cybersecurity, among other issues. She also spent several years as Maryland’s commissioner of financial regulation. Ms. Raskin is married to Representative Jamie Raskin, a Maryland Democrat.If confirmed, she would be only the second person formally appointed as the Fed’s vice chair for supervision, succeeding Randal K. Quarles, a Trump administration pick who typically favored lighter and more precise regulation. Ms. Raskin, by contrast, has a track record of calling for stricter regulation. Dr. Cook and Dr. Jefferson might both might be quizzed about their views on policy and professional backgrounds. The Fed has seven governors — including its chair, vice chair and vice chair for supervision — who vote on monetary policy alongside five of its 12 regional bank presidents. Governors hold a constant vote on regulation.Philip N. Jefferson, an administrator and economist at Davidson College who has worked as a research economist at the Fed, is also a nominee for the Fed’s board.John Crawford/Davidson CollegeDr. Cook, who would be the first Black woman ever to sit on the Fed’s board, is a Michigan State University economist well known for her work in trying to improve diversity in economics. She earned a doctorate in economics from the University of California, Berkeley, and was an economist on the White House Council of Economic Advisers under President Barack Obama.“High inflation is a grave threat to a long, sustained expansion, which we know raises the standard of living for all Americans and leads to broad-based, shared prosperity,” Dr. Cook said, after emphasizing her decades of experience, calling tackling America’s current burst in prices the Fed’s “most important task.”Dr. Jefferson, who is also Black, is an administrator and economist at Davidson College who has worked as a research economist at the Fed. He has written about the economics of poverty, and his research has delved into whether monetary policy that stokes investment with low interest rates helps or hurts less-educated workers.He seconded that the Fed must “ensure that inflation declines to levels consistent with its goals,” speaking in his prepared testimony.Dr. Cook, Dr. Jefferson, and Ms. Raskin are up for confirmation alongside Jerome H. Powell — who had previously been renominated as Fed chair — and Lael Brainard, a Fed governor who is the Biden administration’s pick for vice chair. Senator Sherrod Brown of Ohio, the committee chairman, said all five candidates will face a key committee vote on Feb. 15, and that Senator Chuck Schumer of New York, the majority leader, “knows to move quickly” for a full floor vote.If all pass, the Fed’s leadership will be the most diverse in both race and gender that it has ever been — fulfilling a pledge of Mr. Biden’s to make the long heavily male and white central bank more representative of the public that it is intended to serve. More

  • 88 Shares129 Views

    in Economy

    Biden Will Nominate Three New Fed Officials

    by

    The nominees would bring more diverse leadership to the Fed, which has struggled to expand its ranks.President Biden plans to nominate three new Federal Reserve officials as he seeks to remake the central bank at a critical economic moment, a White House official familiar with the matter said on Thursday.If confirmed, his picks would result in the most diverse Fed board in the institution’s history.The White House plans to nominate Lisa Cook, an economist at Michigan State University who has researched racial disparities and labor markets, and Philip Jefferson, an economist and administrator at Davidson College, to open seats on the Fed’s Board of Governors. Both Ms. Cook and Mr. Jefferson are Black.Mr. Biden will also nominate Sarah Bloom Raskin to serve as the Fed’s vice chair for supervision, a job created to help police the nation’s largest banks after the 2008 financial crisis.Mr. Biden had previously nominated Jerome H. Powell for a second stint as Fed chair and Lael Brainard, now a governor, as vice chair of the central bank. If they are confirmed to their posts, the seven-person Fed board would have four women, one Black man and two white men — the most diverse team in the Fed’s roughly 108 years of existence.The administration had promised to make the Fed — historically dominated by white men — look more like the public it served, and prominent lawmakers have pushed for a focus on tougher financial regulation. The picks seek to deliver along those dimensions.“The headline is, and should be, about diversity,” said Kaleb Nygaard, a senior research associate at the Yale Program on Financial Stability who studies the Fed, explaining that personnel choices are a big moment for Mr. Biden. “This is the biggest chance he’s got to send a message about what he wants the Fed to be focused on.”Ms. Raskin, who served as a Fed governor during the Obama administration, has a track record of arguing for more forceful bank oversight and would be likely to usher in an era of stricter rules for the titans of global finance, a priority of some powerful congressional Democrats.If confirmed, Ms. Raskin would be in charge of determining the need for new financial regulations, enacting existing rules and running large and globally important banks through their annual health checks, which are commonly called stress tests.Ms. Raskin would succeed Randal K. Quarles, who was appointed by former President Donald J. Trump and had criticized some of the rules that were imposed on banks after the 2008 financial crisis. As vice chair, Mr. Quarles instituted a number of adjustments to regulation and supervision that made oversight less onerous for banks, and that critics argued weakened financial rules.Mr. Quarles’s term as vice chair expired in October, and he left the Fed at the end of December.Ms. Raskin, a Harvard-trained lawyer who studied economics as an undergraduate at Amherst College, has spent time in the private sector. She is a former deputy secretary at the Treasury Department, where she focused on financial system cybersecurity, among other issues. She also spent several years as Maryland’s commissioner of financial regulation. Ms. Raskin is married to Representative Jamie Raskin, a Maryland Democrat.If confirmed, Ms. Raskin will face a number of pressing issues. The vice chair for supervision serves as the Fed’s chief connection with banks and markets, a role that will take on more prominence as the central bank considers whether to issue a digital currency. The vice chair will have to navigate new technologies, like stablecoins and cryptocurrencies, and assess what those mean for banks.The Fed is developing climate-risk scenarios to judge banks’ exposure, something the vice chair for supervision will be highly involved in. And the person will need to work with other regulators at the Financial Stability Oversight Council — an interagency group focused on guarding against systemic financial risks — to deal with weaknesses in money market funds and other financial instruments that the pandemic laid bare.Mr. Biden’s other picks for the Fed would also enter their jobs at a challenging juncture, as unemployment falls swiftly and inflation remains high, but millions of former workers are still missing from jobs.The Fed is contemplating how quickly to react by removing support from the economy, and all governors hold a constant vote on monetary policy, giving the new picks a potential say in the matter.Dr. Cook — who would be the first Black woman ever to sit on the Fed’s board — is well known for her work in trying to improve diversity in economics, including through the American Economic Association Summer Program, which helps to prepare undergraduates for potential careers in the field.She attended Spelman College and the University of Oxford and earned a doctorate in economics from the University of California, Berkeley. She was an economist on the White House Council of Economic Advisers under President Barack Obama.She has not said much publicly about her monetary policy philosophy, though she has spoken favorably about keeping the Fed independent from politics. Her published work examines a wide range of topics: her doctoral thesis focused on credit markets in tsarist and post-Soviet Russia, while some of the work she is most famous for looked into mortality and race, and segregation and lynching.Dr. Cook is an academic focused on macroeconomics, but “she is not a traditional one — she has looked at what we get wrong, sometimes, in the economy,” Julia Coronado, founder of the research firm MacroPolicy Perspectives, said in an interview before the pick was announced. “She is somebody who can hold her own, I think, in that room.”Mr. Jefferson has worked as a research economist at the Fed board, and studied at the University of Virginia and Vassar College. He has written about the economics of poverty, and his research has delved into whether monetary policy that stokes investment with low interest rates helps or hurts less-educated workers.“My findings suggest that opportunities start to open up for them as the labor market gets tight,” he said in an interview with the Minneapolis Fed in 2018.He has also spoken candidly about his experience as a minority in economics.“In graduate school at the University of Virginia, I was the only African American in the program the entire time there,” he said in that 2018 interview, noting that that had followed him into his professional appointments. “It has been a long, lonely road professionally.”And he said economics needed more diverse voices.“We need to be sitting around the table,” he said. “I think it is crucially important for public policy that we hear voices that represent diversity.”With the new slate of candidates, what is arguably the top policymaking body in global economics will become much more varied in both race and gender.There were briefly three women on the board in the early 1990s, and again in the 2010s. The Fed has had three Black board members in its history, all men, and none of them sat on the board contemporaneously.It is unclear how the reworked board might alter debate over current monetary policy, which could involve sticky choices about how quickly to slow an economy struggling with rapid price increases. The Fed has signaled it is prepared to raise interest rates, which could choke off inflation but also slow the job market and wage growth.Mr. Powell, the Fed chair, emphasized this week that achieving full employment — a goal that the Fed has emphasized in recent years as a way to foster inclusion and opportunity across the economy — depended on maintaining price stability.“If inflation does become too persistent, if these high levels of inflation get entrenched in our economy, and in people’s thinking, then inevitably that will lead to much tighter monetary policy from us, and it could lead to a recession, and that would be bad for workers,” Mr. Powell said while testifying before lawmakers on Tuesday. More

  • 138 Shares99 Views

    in Economy

    Lael Brainard is Tapped For Vice Chair of the Federal Reserve

    by

    President Biden said on Monday that 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 inner policy circle of the Fed chair, Jerome H. Powell. 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.Ms. Brainard’s elevation comes at a pivotal economic moment. The Fed is wrestling with how to set policy at a time when inflation has shot higher but millions of jobs remain missing. Like Mr. Powell, Ms. Brainard has been wary of reacting to high prices too swiftly by lifting interest rates to choke off growth, worried that it could diminish job market opportunities. But both are carefully watching the price trajectory, with an eye on ensuring that high inflation does not become a long-lasting trend.“I’m committed to putting working Americans at the center of my work at the Federal Reserve,” Ms. Brainard said during a news conference Monday at the White House, where Mr. Biden introduced his picks. “This means getting inflation down at a time when people are focused on their jobs and how far their paychecks will go.”Ms. Brainard also pledged to ensure that the economy would be “sustainable for future generations” and that the Fed would reflect “the diversity of the communities we serve.”Her views on financial regulation and climate change have won her plaudits from some progressives but drawn concern from Republicans, raising questions about how much support she might win in the Senate. Senator Patrick J. Toomey of Pennsylvania, the top Republican on the Banking, Housing, and Urban Affairs Committee, applauded Mr. Powell’s reappointment but couched his support for Ms. Brainard.“While I have concerns about regulatory policies that Governor Brainard would support as vice chair, I look forward to meeting with her to discuss these and other matters,” Mr. Toomey said in a statement on Monday.Senator Kevin Cramer of North Dakota, another Republican on the committee, also said he had concerns about Ms. Brainard’s regulatory policies and looked forward to discussing those matters with her.Ms. Brainard has been a major proponent of a more active Fed role in making sure the financial system is prepared for potential fallout from climate change. She gave a speech at the Fed’s first climate-focused conference in 2019 and has recently focused on the need for climate scenario analysis for banks, which would test how well they would hold up amid extreme weather events, sea level change and other climate-tied risks.As the sole Democrat left at the Fed board in Washington after 2018, Ms. Brainard used her position to draw attention to efforts to chisel away at bank rules, a process that was being driven by Randal K. Quarles, the Fed’s vice chair for supervision, who is stepping down in December. In the process, she created a rare public disagreement at the consensus-driven central bank, dissenting from policy changes more than 20 times in 2019 and 2020.Ms. Brainard often released detailed explanations of her dissents, laying out a road map of what changes were made and why they might be problematic. For instance, when the Fed streamlined its stress-test approach, she supported simplification in spirit — but disagreed with how it was done.“Today’s rule gives a green light for large banks to reduce their capital buffers materially, at a time when payouts have already exceeded earnings for several years on average,” she said, publishing an analysis of how she came to that conclusion, one that Mr. Quarles disagreed with.Her new position will not give her more direct say over financial regulation than she previously had — governors all have a single vote on regulatory decisions — but she and her record of dissents could be a resource for the new person coming into the vice chair for supervision job.Senator Sherrod Brown, an Ohio Democrat and chairman of the Banking, Housing, and Urban Affairs Committee, said Ms. Brainard had “spent her life fighting for a stronger, fairer economy.”“At this moment, when workers are finally starting to see more power in our economy, we need a vice chair who understands that our economic recovery must strengthen our communities and put workers first,” Mr. Brown said in a statement.Ms. Brainard would be the third woman in the Fed’s 108-year history to hold the job, following in Janet L. Yellen’s and Alice Rivlin’s footsteps. Her new role would put her in a powerful position to weigh in on the path ahead for digital currency as the Fed contemplates whether it needs to issue one, something some other global central banks have done or are in the process of doing. Her more elevated position could also give her a bigger bully pulpit on climate-related issues.Ms. Brainard is a longtime Washington policymaker. She played a leading role in European debt crisis and Chinese currency deliberations during the Obama administration as a Treasury Department official, and she worked for the National Economic Council during the Clinton administration. She earned her economics doctorate at Harvard and was an up-and-coming professor at the Massachusetts Institute of Technology before moving to Washington to pursue a career in policy.Ms. Brainard was initially viewed as a leading candidate for Biden administration Treasury secretary, and her name continues to surface as a potential successor should Ms. Yellen, who now holds that top policy role, step down. More

  • 113 Shares99 Views

    in Economy

    Biden Will Keep Jerome Powell as Federal Reserve Chair

    by

    WASHINGTON — President Biden said Monday that he would renominate Jerome H. Powell, the Federal Reserve chair, to another four-year term, opting for policy continuity at a moment of rapid inflation and economic uncertainty and betting that the Fed will do more to help workers reap the gains of the pandemic recovery.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.While some progressive Democrats criticized Mr. Powell’s reappointment, the move was primarily greeted with bipartisan praise that suggested an easy path to confirmation.Mr. Biden also said he planned to nominate Lael Brainard, a Fed governor whom many progressive groups had championed to replace Mr. Powell, to serve as the Fed’s vice chair, a move that helped mollify some criticism on the left.The president and his top aides believe that Mr. Powell has done well in supporting the economy through the pandemic recession and a halting recovery, while amassing credibility by standing up to political pressure from Mr. Trump. But Mr. Biden is also making a calculated bet that the Fed chair will be more aligned with his views on the economy and, in particular, inflation, than he is with Republicans in the Senate who have demanded quicker action from the Fed to tamp down rising prices.“At this moment, of both enormous potential and enormous uncertainty for our economy we need stability and independence at the Federal Reserve,” Mr. Biden said during remarks at the White House. “And we need people of character and integrity, who can be trusted to keep their focus on the right long-term goals of our country, for our country.”The stakes in the choice are unusually high.Inflation has jumped because of booming consumer demand, tangled supply lines and labor shortages that have helped to push up the cost of used cars, couches and even food and rent. Yet millions of workers are missing from the labor market compared with before the pandemic.The central bank is charged with keeping consumer prices stable while striving for maximum employment, and striking that balance could require difficult policy choices in the months ahead.Mr. Biden, who is facing a delicate balancing act within his own party, deliberated over the pick for months. He consulted with both progressive and moderate Democrats along the way, seeking their views on inflation, worker considerations, financial regulation and climate change policy at the Fed.That included Senator Elizabeth Warren, who had called Mr. Powell “a dangerous man,” and suggested she would not support his renomination during a testy hearing in late September. Mr. Biden met with Ms. Warren on Nov. 9 in the Oval Office to discuss Fed appointments and called her last Thursday, before he had settled on a pick, according to a person with knowledge of the discussions.On Friday, Mr. Biden called Mr. Powell and Ms. Brainard to inform them that he had made his choice. The decision was influenced in large part by Mr. Biden’s belief that he and Mr. Powell are philosophically aligned when it comes to keeping interest rates low and continuing to support the economy until more people are working and wages are rising.On Monday, Mr. Biden said he believed the Fed had more work to do to get to “maximum employment.”“That’s an economy where companies have to compete to attract workers, instead of workers competing with each other for jobs, where American workers get steady wage increases after decades of stagnation, and where the benefits of economic growth are broadly shared by everyone in the country, not just concentrated for those at the top,” he said.Yet some economists, and many Republicans, say the Fed runs the risk of allowing inflation to spin out of control if it does not start to pull back efforts to fuel economic growth, with workers demanding increasingly higher wage increases to cover rising costs, resulting in 1970s-style inflation.Mr. Biden has been suffering politically as prices rise for food, gas and airplane tickets. The president has repeatedly tried to reassure Americans that his economic policies will ultimately calm inflation, a message he is expected to repeat during remarks on Tuesday.But his larger economic agenda has become tangled in the politics of price increases, particularly as the president pushes Senate Democrats to coalesce around a $2.2 trillion climate change and social policy bill that Mr. Biden says will ease inflationary pressures in years to come but Republicans warn will stoke higher prices immediately.Mr. Biden said he was certain that both Mr. Powell and Ms. Brainard would work to stabilize inflation and keep the economic recovery on track.“We’re in a position to attack inflation from the position of strength, not weakness,” he said.Mr. Powell, who appeared alongside the president and Ms. Brainard at the White House, acknowledged the challenge ahead.“We know that high inflation takes a toll on families, especially those less able to meet the higher costs of essentials like food, housing and transportation,” he said, adding that the Fed would “use our tools both to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched.”Mr. Powell’s reappointment suggests that the White House, which has a chance to fully reshape the Fed, is not aiming to completely overhaul the institution.The Biden administration already has one vacant governor role to fill, and two more seats will open early next year, giving Mr. Biden room to appoint at least three of seven governors. The president must also fill several leadership roles, including the Fed’s vice chair for supervision, a powerful position given its influence on bank oversight.Mr. Biden has been under pressure from progressives and moderate Democrats to pick a diverse slate of leaders for the Fed who would prioritize tough bank regulation and do what they could to address climate change risks in the financial system.Lael Brainard is the president’s choice to be the Federal Reserve’s vice chair.Justin T. Gellerson for The New York TimesMr. Powell has faced opposition from some progressive Democrats, who have faulted him for not using the Fed’s tools to help combat climate change and for voting to loosen financial rules for the nation’s biggest banks.He has also come under criticism for an ethics scandal that took place while he was overseeing the central bank. Two of the Fed’s 12 regional presidents made significant financial trades for their private accounts in 2020, when the Fed was actively rescuing many markets from pandemic fallout.Mr. Biden tried to ease at least some of those concerns, saying that Mr. Powell had assured him that the Fed would “accelerate” efforts to address and mitigate the risk that climate change poses to the economy.Mr. Biden also said he planned to soon nominate a new vice chair for supervision. In conversations with Mr. Biden, Mr. Powell convinced the president he would follow the lead of that person in setting financial regulatory policy, according to people with knowledge of the matter.Whether that will be enough to appease Mr. Powell’s critics remains to be seen. Ms. Warren said in a statement on Monday that she would not vote for Mr. Powell’s confirmation. Still, she did not recount her litany of concerns about him.Another critic, Senator Sheldon Whitehouse of Rhode Island, who opposed Mr. Powell’s reappointment, said on Monday that was “disappointed” in Mr. Biden’s decision. But he did not say whether he would vote no on his nomination.“I sincerely hope that, if confirmed, Powell will reassess his past opposition to utilizing the Fed’s regulatory tools to minimize climate-related risks to the financial sector,” he said.Other Democrats were more supportive, including Senator Sherrod Brown of Ohio, who praised Mr. Powell for helping steer the economy through the pandemic. Mr. Brown’s position is important — he is the chairman of the Senate Banking Committee, which oversees the Fed and will handle the confirmation hearings for both Mr. Powell and Ms. Brainard.Republicans, who supported Mr. Powell when he was nominated as chair by Mr. Trump, also lauded Mr. Biden’s decision.Senator Patrick J. Toomey, Republican of Pennsylvania and the ranking member on the Senate Banking Committee, released a statement saying he would support Mr. Powell’s nomination, as did several other of his party’s senators. That full-throated support did not extend to Ms. Brainard, however, with Mr. Toomey and other Republicans saying they had some concerns about her views on financial regulation and other issues.The big challenge ahead for Mr. Powell is deciding when — and how quickly — to remove pandemic-era economic support that the central bank has been using to cushion workers, businesses and financial markets.The Fed has so far decided to slow its large bond-purchase program, a first step toward withdrawing monetary policy support that will leave it more nimble to raise interest rates next year if reining in the economy becomes necessary.The federal funds rate has been set to near-zero since March 2020, keeping many types of borrowing cheap and helping to fuel home and car purchases and other types of demand that in turn set the stage for strong hiring. Raising it could cool off growth and weaken inflation.Yet trying to slow price gains would come at a cost. Workers are still trickling back after severe job losses at the onset of the pandemic, and the Fed is hoping to give the job market more space and time to heal. That’s especially true because continued waves of infection may be keeping many people from searching for work, either out of health concerns or because they lack child care. More

  • 75 Shares169 Views

    in Economy

    Biden Renominates Powell as Fed Chair

    by

    Whether it’s reporting on conflicts abroad and political divisions at home, or covering the latest style trends and scientific developments, Times Video journalists provide a revealing and unforgettable view of the world.Whether it’s reporting on conflicts abroad and political divisions at home, or covering the latest style trends and scientific developments, Times Video journalists provide a revealing and unforgettable view of the world. More

  • 150 Shares189 Views

    in Economy

    Behind the Powell Pick: A Bet the Economy Has Room to Grow

    by

    President Biden’s decision to renominate Jerome H. Powell to head the Federal Reserve reflects the president’s belief that despite high inflation, America’s economy still has a long way to go to deliver strong gains to women, Black and Hispanic Americans and low-wage workers trying to climb into the middle class.Mr. Biden made clear during a White House appearance that he believes Mr. Powell is philosophically aligned with his vision that the central bank needs to keep interest rates low and continue supporting the economy until it reaches maximum employment.“That’s an economy where companies have to compete to attract workers, instead of workers competing with each other for jobs, where American workers get steady wage increases after decades of stagnation, and where the benefits of economic growth are broadly shared by everyone in the country, not just concentrated for those at the top,” Mr. Biden said Monday.The president’s decision is also based on his belief that Mr. Powell and Lael Brainard, the Fed governor whom Mr. Biden nominated for vice chair on Monday, share his views on stabilizing inflation while being careful not to snuff out the recovery before the labor market heals.It is a gamble on several fronts for the president. He is betting that Mr. Powell will be more aligned with his views on the economy than he is with Republicans in the Senate who have decried rising inflation for months and demanded action from the Fed. Many of those Republicans endorsed Mr. Powell quickly on Monday, expressing hope that he would act swiftly to combat inflation.The president is also betting that his team is correct in its economic diagnosis that the inflation risk is fading and marginalized groups of workers still need help to reap the full gains of economic growth.Mr. Biden and his aides view the recent burst of inflation, which surged to its highest levels in three decades last month, as largely the product of crimps in global supply chains — and not a function of monetary policy that necessitates quick rate increases from the central bank.The decision to renominate Mr. Powell and to elevate Ms. Brainard is the sum of a wide range of political and economic calculations. Chief among them was choosing the chair with the desire, and bipartisan support, to pursue full employment.But administration officials say other considerations also favored Mr. Powell’s reappointment, like the need to maintain central bank stability in the midst of the economic disruption of a pandemic and the record of independence that Mr. Powell built over a four-year term that included withering criticism from former President Donald J. Trump, who appointed him to the chairmanship.Mr. Powell also appears to have defused, in the eyes of the president and his aides, liberal Democrats’ concerns that on his watch the Fed has not regulated big banks and other financial institutions stringently enough. In conversations with Mr. Biden leading up to the decision, Mr. Powell convinced the president he would follow the lead of the Fed’s vice president for supervision — an open position that Mr. Biden has yet to fill — in determining the central bank’s policies on financial regulations.Mr. Biden is expected to announce his pick for that job early next month, and Democrats expect him to nominate someone who will take a hard line on banks, a key demand of Senator Elizabeth Warren of Massachusetts, a progressive who opposes Mr. Powell’s renomination and has called him “dangerous.” Mr. Biden recently discussed his Fed picks with Ms. Warren, and he has been in regular contact with Senator Sherrod Brown of Ohio, the Democrat who leads the banking committee. More