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.
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.
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,
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.