in

Trump shattered tradition on Fed chair. Some Dems want Biden to do the same.

Left-leaning activists and lawmakers are pushing President Joe Biden to dump Federal Reserve Chair Jerome Powell for Fed Governor Lael Brainard with a last-ditch message: Don”;t miss a rare opportunity to install a known and tested Democrat atop the world”;s most important economic institution.

It”;s a conundrum for Biden. He can stick with Powell, a choice that would please markets –; renominating someone from the opposite party as Presidents Ronald Reagan, Bill Clinton and Barack Obama did –; or put his own stamp on the Fed for years as President Donald Trump sought to do four years ago with a member of his own party. If Biden picks Republican Powell, it will mean only one Democrat in more than three decades will have been elevated to the top Fed post.

People close to the president say his instinct would be to stick with Powell, even though he barely knows him. Biden likes to be bipartisan when he can and doesn”;t want to do anything to jeopardize the long-running rally on Wall Street. But at least some in the small circle of advisers who will help make the call will argue that the left will revolt at a Powell renomination and that Wall Street would be fine with Brainard, a former Treasury official with a deep background in policymaking.

“;Brainard and Biden come from similar wings of the Democratic Party,”; said Jeff Hauser, director of the progressive Revolving Door Project, which opposes Powell. “;Brainard is just a better bet to naturally, independently arrive at a similar place to the Biden administration than Powell.”;

Some progressives are urging the president to choose his own person, rather than sticking with the incumbent, as Trump did in 2018 when he broke a long-standing practice by ousting then-Chair Janet Yellen, a Democrat, in favor of Powell.

The choice of who will lead the central bank when Powell”;s term expires in February is one of the most crucial personnel decisions Biden will make in his presidency, with the Fed playing a pivotal role in helping the economy emerge from the pandemic as job growth falters and supply chain disruptions threaten the recovery.

The administration hasn”;t indicated when a decision is coming, but a White House official said it would be made “;in a timely manner.”;

Powell has been aligned with Biden and Democrats on the Fed’s most important and far-reaching policy: keeping borrowing costs low so more Americans benefit from the recovery. “;He”;s gone beyond even where someone like Janet Yellen went,”; said Sarah Binder, a political science professor at George Washington University who is an expert on Fed politics.

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.

She has been a trusted adviser to Powell on monetary matters, while investors have also gotten a strong sense of her thinking over the years through her public remarks.

“;Markets still assume it will be Powell but could live with Lael,”; said Mohamed El-Erian, president of Queens College Cambridge and chief economic adviser at financial giant Allianz.

Over the past four years, she built credibility with the progressive wing of the Democratic Party by dissenting more than 20 times on moves by Trump”;s appointees, including on rollbacks of regulations placed on big banks after the 2008 financial crisis.

But she”;s not entirely a darling of the left either. In her stints in the Clinton White House and in the Treasury Department under Obama, she promoted some free-trade policies despised by activists. That background led many of the same groups that now tacitly support her candidacy for Fed chair to oppose the prospect of her becoming Treasury secretary under Biden.

Brainard also irritated some people on the Biden transition last fall when stories began appearing in national media outlets that positioned her as a frontrunner for the top Treasury job. While she was not quoted in those stories, some on the Biden transition felt that she and her team were orchestrating them and didn”;t appreciate the public campaigning for the job.

Her bid for Fed chair, in contrast, has been much more muted. Brainard has told her allies that an open contest between her and Powell wouldn”;t be good for the Fed and that the two have worked together well, according to the former Obama official.

She declined to comment for this story through a Fed spokesperson.

Brainard could face a bruising fight in the Senate, unlike Powell, who would probably get the backing of most Republicans and moderate Democrats. Some Democratic lawmakers have already publicly come out in support of the incumbent.

“;As our economy continues to recover from one of the greatest economic crises in our history, we need a steady hand at the wheel –; and Chairman Powell has been just that,”; Sen. Jon Tester (D-Mont.) said in a statement. “;He has served as a nonpartisan steward of the economy while skillfully helping guide our economy through this crisis, and he”;s proven that he won”;t bow to political pressure from either side of the aisle.”;

Republicans, in turn, are already gearing up to oppose a Brainard nomination, whether to the chair or to one of the No. 2 spots at the central bank, according to GOP aides. Though Democrats control the Senate, Republicans could drag out her confirmation, something the White House may want to avoid for fear of disrupting markets.

While Brainard easily cleared her 2014 confirmation to the Fed board with the support of 11 GOP senators, most of those lawmakers are now gone; only Sens. Susan Collins (Maine), Mike Crapo (Idaho), Lisa Murkowski (Alaska) and Rob Portman (Ohio) remain.

Key Republicans are planning to revive paperwork issues Brainard had when she was nominated to the Treasury Department in 2009, such as failing to disclose late tax payments and errors on legal forms for her household employees, according to GOP aides who say it shows she wasn”;t forthcoming with the Senate Finance Committee.

“;Paperwork for a role from more than a decade ago is not going to”; sink Brainard”;s nomination, said Isaac Boltansky, policy research director for Compass Point Research & Trading. “;But it does go to the broader issue here, which is, does the White House really want to fight a tooth-and-nail battle over the most important financial position in the economy?”;

Indeed, with committees split evenly along party lines, Republicans have held up for months Biden”;s pick to lead the Consumer Financial Protection Bureau.

But Dennis Kelleher, head of Better Markets, a group that advocates for tougher bank regulation, pointed to Republican support for Powell as a reason for skepticism about how well he might mesh with the Biden administration”;s agenda.

“;The whole point of a four-year term is so that the political process and the public”;s elected officials get to decide who is going to run the most important financial and economic policymaking body in the country,”; he said. “;I find it hard to believe that in a country of 320 million people there isn”;t one Democrat who is more or better qualified for the job than Jay Powell.”;

Alex Thompson contributed to this report.

Read more: politico.com

What do you think?

50 Points
Upvote Downvote

Written by mettablog

Millennials Know How to be Prepared

Another injury blow? Newcastle assessing Joe Willock ahead of Leeds