A diverse Biden Fed taking form

January 14, 2022
By Theresa Sheehan

The nomination hearings for Jerome Powell for a second term as Fed chair and Governor Lael Brainard to a four-year term as vice chair are out of the way. It will take a couple of weeks for written responses to questions posed by Senate Banking Committee members to be delivered and considered, but it’s likely that both will receive a recommendation by the committee in fairly short order and a vote before the full Senate.

At least for Powell – whose current term as chair expires in the first days of February – a vote should take place to ensure there is no lapse. There have been one or two times in the past where the end of a chair’s four-year term has coincided with the first FOMC meeting of the year which resulted in the necessity to make minor adjustments. For example, when Chair Alan Greenspan’s term ended on January 31, 2006 and the meeting was scheduled for January 31-February 1, the meeting was shortened to January 31 only. Ben Bernanke was confirmed as the next chair on January 31 and sworn in the next day. In any case, that won’t be a problem this year as the FOMC meeting is on January 25-26.

President Biden has made his picks for the three vacancies on the Board of Governors and sent them to the Senate on Thursday night. The official White House statement was released Friday morning: the nominees are former Fed Governor Sarah Bloom Raskin as Governor and Vice Chair for Supervision, Lisa Cook and Philip Jefferson. Cook is a professor of economics and international relations at Michigan State University. If confirmed, she will have the distinction of being the first black woman on the Board of Governors. Philip Jefferson is a professor of economics at Davidson College. If confirmed, he would be the fourth black man to become a governor of the Fed.

What the White House statement did not include was which terms as governor each person was nominated to. Opening up is a full 14-year term to run from February 1, 2022 through January 31, 2036, and two unexpired terms running through January 31, 2024 and January 31, 2032, respectively. Raskin is likely to get one of the two longer terms to ensure she can serve the full four years as vice chair of supervision without needing to be reconfirmed as a governor.

The nominations reflect attention to the criticism of a lack of diversity at the top levels of the Federal Reserve. However, it also is likely to be the product of careful vetting to ensure that candidates are both well-qualified and able to navigate what has become a highly partisan, contentious, and at times lengthy confirmation process. Based on the questioning by Republicans on the Senate Banking Committee of Powell and Brainard this week about the Fed and its involvement in social justice and the environment issues, Raskin’s recent remarks about climate change are going to be a hot topic in her confirmation hearing. It could be a back door to painting the Fed and its top officials as politically involved and biased, and an excuse to deny the Biden nominees a place on the Board of Governors.


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