Biden’s Fed pick puts progressives on notice

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President Biden’s nomination of Jerome Powell for a second term as Federal Reserve chairman reflects Biden’s willingness to stare at Biden’s progress to get his cherished build back better legislation through the Senate and into law.

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why it matters: Inflation threatens Biden’s $2 trillion social spending and climate package, and Biden wants to save his political capital for that fight with moderates.

Running news: Biden was unwilling to drop Powell for a moderately more progressive candidate like Fed Governor Lyle Brainard, simply to appease Sen. Elizabeth Warren (D-Mass.), who in September called Powell a “dangerous man” with his face. Said.

  • Instead, Biden named Brainard the vice chair.
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big picture: Powell and Brainard, allies of the Fed, do not have a vastly different view on inflation and how quickly the stimulus can be removed from the economy.

  • Biden’s move contrasts an easy confirmation process over continuity and a symbolic battle that could have risked market turmoil.

What are they saying: Biden’s bets appear to have worked, with significant Senate Democrats and Republicans promising to ratify him.

  • “I look forward to working with Powell to stand up to Wall Street and stand up for workers,” said Senate Banking Committee Chairman Sherrod Brown (D-Ohio).
  • After clearing his throat about Powell and inflation, ranking Republican Pat Tommy (R-Pa.) on banking followed him: “I look forward to supporting his confirmation,” he said.
  • Former Treasury Secretary Larry Summers, a frequent Biden critic on inflation, was all praise today: “The institution is in good hands,” he tweeted,
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On the other end: Warren vows to oppose Powell, promising to support Brainard.

  • But her Powell criticism was muted, and she seemed more focused on fighting for a stronger vice president for bank supervision, which Biden did not fill in today.
  • “This position needs to be filled by a strong regulator with a proven track record of tough and effective enforcement – ​​and it needs to be done quickly,” Warren said.

What are we watching: Biden indicated progressives may be more pleased with his future Fed picks, promising that diversity will be a key factor in filling the other three positions.

  • “While Jay and Lyle bring consistency and stability to the Fed, my additions will bring new perspectives and new voices,” he said.
  • In addition to inflation, the Fed has traditionally faced challenges outside of its purview – from climate change to cryptocurrency regulation. by bloomberg news understood them The “difficult economic problems” are the most complex in the Fed’s 107-year history.

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