Senator Elizabeth Warren (D, Mass) during the Banking, Housing and Urban Development Committee hearing that she would not vote for Jerome Powell to renew his term as Federal Reserve chairman.
Warren criticized Powell for lifting financial regulations imposed after the 2008 financial crisis “which makes him a dangerous man,” Warren told the FED chairman during the hearing.
Although Warren had in the past expressed displeasure with Powell’s stewardship of the FED, she had not to date explicitly said she would oppose a second appointment of Powell as FED chairman.
Warren’s opposition complicates the political calculus of the Biden administration as it tries to strike a balance between the demands of the progressive and moderate wing of her party, as well as a position that will win her more concessions from Republicans.
Powell was appointed FED chairman by the Donald Trump administration, and during his term he has received the thumbs up from members of both parties. Despite opposition from senators such as Elizabeth Warren, Powell has the support of several members of the Democratic Party.
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At the hearing not only was Elizabeth Warren critical of Powell’s lax implementation of anti-bank regulations, Senator Warren’s complaints were joined by those of Senator Sherrod Brown (D-Ohio), chairman of the Senate Banking Committee, who agrees with Warren that Powell has been too lax with the banks.
Powell’s political affiliation plays against him in Warren’s view, as the FED chairman is a Republican. It has been eight months since Joe Biden’s appointment as chairman, and although he has not spoken out against Powell, it is not certain that he will go, just as it is not certain that the president wants to continue to have at the head of the FED a person appointed by his predecessor, and not someone appointed by himself and more akin to his political leanings.
Powell is also not short of allies in the Senate. The current FED chair maintains relationships with most lawmakers from both parties, and 68 of the 84 senators who supported him during his 2018 confirmation are still in office. Having the support of the Republican Party, as well as a good portion of Democratic lawmakers, it is possible that Jerome Powell will be reconfirmed as FED Chairman.
The Secretary of the Treasury, Janet Yellen, on other occasions has praised Powell’s work as FED Chair, and has seconded the monetary policy decisions made by the Central Bank.
Lael Breinard positioned as Jerome Powell’s replacement
According to The Wall Street Journal, the most likely candidate to replace Powell is Lael Brainard, who is a member of the FED’s Board of Governors, a former Treasury undersecretary for international affairs, and a member of the Democratic Party.
Brainard has the support of Elizabeth Warren, who spoke favorably of her in a Bloomberg interview, and even of the Senate Banking Committee itself, which is looking for the Fed to be chaired by a person with a tougher stance on banking regulation in the United States.
Aside from favoring tougher regulation of the banking sector, Brainard also advocates for financial and banking institutions to take a more active role in mitigating the economic effects of climate change, which would make her even more attractive for the position in the eyes of the progressive wing of the Democratic Party.