FILE – Federal Reserve Chairman Jerome Powell speaks at an event in the South Court auditorium of the White House complex in Washington, November 22, 2021. Powell says the appearance of a new variant of COVID-19 could slow the economy and hiring. He also says it increases uncertainty about inflation. Powell said in remarks for the Senate Banking Committee on Tuesday that the recent increase in coronavirus cases and the emergence of the omicron variant pose downside risks to jobs and economic activity and uncertainty increased for inflation. (Susan Walsh / AP)
NOURISHED 1,022 words White House moves closer to three remaining Fed appointments WASHINGTON – The White House is seriously considering appointing Sarah Bloom Raskin to become the Fed’s main banking regulator, and Lisa Cook and Philip Jefferson as Fed governors, according to people familiar with decision making progress.
The candidates would complete President Joe Biden’s list to the Fed’s seven-seat board, while appealing to Democrats who have pushed for increased scrutiny of Wall Street and those who have pushed for more diversity in the within the senior ranks of the Fed. If confirmed, Cook would be the first black woman to serve on the Fed’s board of directors in its 108-year history. Jefferson is said to be the fourth black man on the Fed’s board of directors.
Raskin has a proven track record in policy making, having served as Assistant Secretary of the Treasury Department in the Obama administration from 2014 to 2017. She also served as a governor on the Fed’s board of directors from 2010 to 2014.
Raskin also drew attention to the risks climate change poses to the financial system and the need for regulators to respond in his more recent work in academia.
Cook is one of the nation’s foremost economists and teaches at Michigan State University, with an emphasis on macroeconomics, economic history, international finance, and innovation. She worked on the White House Council of Economic Advisers during the Obama administration and held visiting positions at the National Bureau of Economic Research, the University of Michigan, and the Federal Reserve Banks in New York, Chicago, Minneapolis and Philadelphia.
Jefferson is vice president of academic affairs and dean of faculty at Davidson College. He previously worked as an economist for the Board of Governors of the Federal Reserve as well as for the New York Fed. His research has focused on inequality, how business cycles affect poverty rates, and the role of education as a shield against unemployment. The Wall Street Journal and Bloomberg previously reported on Jefferson’s candidacy.
Raskin, Cook and Jefferson did not respond to requests for comment Wednesday morning. The White House declined to comment.
Biden had a tremendous opportunity to shape the central bank, which has struggled with the highest inflation in nearly 40 years, and decisions on when to raise interest rates in response. To the frustration of many close to the Fed, the White House and Hill, Biden’s selection process has been repeatedly delayed as the administration deals with its long list of economic priorities, stimulus packages infrastructure agreements. There has been at least one vacancy on the board during Biden’s entire tenure.
In November, Biden announced he was reappointing Jerome H. Powell for a second term as president. He also elevated Fed Governor Lael Brainard, the central bank’s only Democrat, to the vice-presidency.
These decisions have been widely seen as a sign of consistency within the Fed, and Democrats and Republicans broadly support Powell’s re-appointment, given his leadership during the covid crisis. But the current members of the Fed’s board of directors are exclusively white. Fed experts saw Biden’s remaining appointments as a test of his own commitment to making the Fed more representative of the country it serves.
“My additions will bring new perspectives and new voices,†Biden said when he appointed Powell and Brainard in November. “I also promise that my additions will bring new diversity to the Fed, which is much needed and long overdue, in my opinion.”
Raskin’s eventual appointment could appease Democrats and left-wing economists, who are worried about who will succeed Randal Quarles as the Fed’s main banking regulator. Quarles, who left the Fed in December, has been heavily criticized by many Democrats for leading the charge to ease the restrictions on the banking system put in place after the Great Recession.
Some Democrats, including Senator Elizabeth Warren, D-Mass., Have also criticized Powell getting a second term because Powell has consistently sided with Quarles on banking matters. Powell himself has said he relies on whoever is in banking to lead the Fed’s regulatory agenda, as he did under Republicans and Democrats.
Those close to the Fed and the White House expected Biden to call on a more progressive banking regulator, like Raskin, to balance Powell, a Republican who was originally chosen for the top post by the former President Trump. But it was not always clear who would be the right one for the job. Many Fed experts say the wobbly role is best suited for a lawyer deeply versed in Wall Street regulation. The Liberals also pushed Biden to appoint someone who would focus on how climate change threatens financial stability.
Fed experts say Democrats likely found their partner in Raskin, who graduated from Harvard Law School and teaches at Duke University School of Law. Raskin is a Distinguished Fellow of the Global Financial Markets Center at Duke Law School and has spoken on the economic and financial stability risks associated with climate change.
In September, Raskin wrote in a column that while none of the country’s regulators were designed to mitigate climate-related financial risks, “all US regulators can – and should – review their existing powers and consider how they might focus on efforts to mitigate climate risk.
“Most of the necessary tools are already there,†Raskin wrote in September. “What is lacking is the will to break the habit of only acting after a disaster. Financial regulators need to reinvent their own role so that they can play their part in the larger reimagining of the economy. “
Yet Raskin’s focus on the climate may make the battle for confirmation more difficult between Senate Republicans and some moderate Democrats, who argue that climate issues do not fit perfectly with the Fed’s mandate of stable prices and full employment, or relate to banking supervision.
The Fed relies much of its reputation on its independence from politics. But he can never completely escape Washington’s churn. Candidates for a president are usually reviewed by the Senate Banking Committee and confirmed by the entire Senate.
It is not known how long this process will take. Confirmation hearings for Powell and Brainard are scheduled to take place before the Senate Banking Committee next week. Powell, Brainard and Raskin have all been confirmed by the Senate before.
The Washington Post’s Tyler Pager and Jeff Stein contributed to this report.