There is growing momentum for President Biden to consider making a big change at the Federal Reserve by nominating a Democrat to lead the central bank of the United States.
According to Politico, some left-leaning activists and members of Congress are trying to convince the president to not renominate the current Fed chairman, Jerome Powell, when his current term expires in February. Instead, they’re trying to urge him to nominate Fed Governor Lael Brainard for the top job. The reasoning is that it is an ideal moment to install a Democrat in the all-important top seat at the Fed, at a crucial time for the nation’s economy.
If he would nominate Brainard, it would mark a break in presidential tradition as past presidents Ronald Reagan, Bill Clinton and Barack Obama all nominated Fed bosses from the opposite political party. Donald Trump however, torpedoed that tradition when he replaced then-chair Janet Yellen with Powell.
Biden has spoken often about his respect for bipartisanship and how important it is for the country. Choosing a nominee for the Federal Reserve chair is a crucial decision for any president, but this comes at an incredibly delicate time for the Biden Administration. The economy has rebounded, but it’s still in a fragile place due to the pandemic. The Fed has a huge role to fill in keeping the economy from faltering as job growth stumbles and supply chain disruptions continue to pose problems.
Brainard is well-respected and has been a key figure in the Fed’s policy decisions. In the video above, she talked with the council on foreign relations about the challenges the U.S. faces in its recovery from the pandemic.
Politico adds that her on-the-job experience could make the decision even easier for Biden.
Brainard, a PhD economist who served as an adviser in the Clinton White House and Treasury under secretary in the Obama administration, was one of the few Democrats to remain in a Senate-confirmed position throughout Trump’s presidency with her seat on the Fed board. She has the tacit support of many progressives.
She championed the notion that the Fed should be more cautious in raising interest rates without any sign of dangerous levels of inflation — a policy formalized under Powell — before any of the central bank’s other policymakers. That’s something her allies point to as evidence that she deserves the top job — even as it drew criticism from some Republicans.
“People who say Powell is great are really saying that Lael is great,” said a former Obama official with close ties to Brainard and progressives.
"[Lael Brainard] championed the notion that the Fed should be more cautious in raising interest rates without any sign of dangerous levels of inflation — a policy formalized under Powell — before any of the central bank’s other policymakers." TRUTH! https://t.co/ms8JUYXsug
— Claudia Sahm (@Claudia_Sahm) September 14, 2021
Some suspect Biden may lean toward keeping Powell so as to not seem too partisan and also to not do anything to rile Wall Street. But Brainard’s experience at the Fed may neuter any such concerns. According to Jeff Hauser of the progressive Revolving Door Project, she is a natural fit with the Biden White House.
“Brainard and Biden come from similar wings of the Democratic Party. Brainard is just a better bet to naturally, independently arrive at a similar place to the Biden administration than Powell.”
Powell and the administration have been together on perhaps the most important decision the Fed has made: keeping the cost of borrowing money low enough so more Americans can benefit from the recovery.
The White House has only said it will make a decision on a nominee in a timely manner.