President Biden announced on Monday he will appoint Federal Reserve Chair Jerome Powell as the institution’s chairman. Biden is opting for stability in the administration’s most important economic position as the threat of growing prices lurks in an electoral year.
There will be no opposition to the nomination
Powell, a conservative and a Trump nominee, is anticipated to receive bipartisan support for his role in averting a financial crisis; this comes at the outbreak of the epidemic and in leading the economy through the terrible downturn that ensued.
However, he’ll be scrutinized by some Democrats, including Sen. Elizabeth Warren, for supervising a relaxation in Wall Street standards. This is a topic that polarized liberals over whether he merits a second term.
Powell, as well as Fed Governor Lael Brainard, a liberal and former Obama Treasury director who was backed by many liberals, made the final decision. The White House revealed that Brainard will be nominated for vice-chair of the board of governors, the central bank’s second-highest position.
— Hugh Hewitt (@hughhewitt) November 22, 2021
“I’m convinced Chair Powell and Dr. Brainard’s concentration on low inflation, stable pricing, and level of employment will help our economy get healthier than it has ever been,” Biden said in a release.
“They also share my fundamental belief that immediate action is required to solve the economic risks presented by climate change and to stay ahead of growing financial system concerns.”
Biden’s decision to support Powell comes at the end of a turbulent four years for the Fed chairman, which included public attacks from then-President Trump, a once-in-a-century virus outbreak that compelled much of the nation to shut down, and the development of new, flashpoint issues like climate change, economic disparity, and diversity.
Is everyone happy with the choice?
Despite criticism that he miscalculated the economy’s recovery in inflation, Powell was re-elected to a second term.
He also prevailed over a fierce, last-minute lobbying effort by liberals to depose him over the central bank’s trading problems, an issue he sought to minimize by revamping the Fed’s conflict-of-interest guidelines.
President Joe Biden's choice of Federal Reserve Chair Jerome Powell over Fed Governor Lael Brainard might not please progressives, but will ensure stability at a potentially treacherous time. https://t.co/6Mp7u3P11E
— Barron's (@barronsonline) November 22, 2021
After months of waiting to see exactly what was going to happen, Biden’s choice helps restore a decades-old heritage of presidents retaining central bank heads, regardless of political affiliation. This is meant to guarantee stock markets and it underlines the Fed’s autonomy from party politics.
When Trump replaced Janet Yellen on the Federal Reserve Board in 2018 with Powell, who had been selected by President Barack Obama six years before, he broke tradition.
Powell’s tenure as chairman does not expire until February. However, administrations routinely appoint central bankers far ahead of time to give markets time to adjust and give Congress time to complete its confirmation process.
When the markets reopened, stocks surged on the news.