Fed Vice Chair Lael Brainard is leaving the Board of Governors as of February 20. After that, she will be joining the Biden Administration’s National Economic Council as Director. This makes her the top economic advisor to President Biden. Her appointment will give her the kind of experience that has often been part of a Fed Chair’s resume, like that of former Fed Chairs Ben Bernanke and Janet Yellen, or former Treasury Secretaries Robert Rubin and Lawrence Summers.

Her departure leaves open an unexpired term as governor that runs through January 31, 2026, and, of course, the four-year job as Vice Chair of the Fed. The White House has recently gone through the process of vetting names for two open spots on the Board of Governors, so the administration may have a name they can offer quickly as a new governor.

President Biden has the option of putting forward an existing member of the board for Vice Chair. Realistically, the only options are the two newest governors. It is unlikely to be Lisa Cook whose term expires on January 31, 2024 unless her nomination for Vice Chair is paired with a re-nomination for another term as Governor. Philip Jefferson’s term as governor runs through January 31, 2036. In his case, serving a four-year term as Vice Chair would not be complicated by crossing the end of his term as governor. Michael Barr is already Vice Chair for Supervision, while Christopher Waller and Michelle Bowman are Trump era appointees.

When Brainard is off the board, it will again mean that the FOMC is short one vote when it next determines monetary policy on March 21-22. This isn’t a significant matter since the current FOMC does not appear to disagree on the direction of monetary policy. But given the at times lengthy and combative process of nominating and confirming a new governor, and the need for a fully staffed leadership at the Fed, it is to be hoped that the Biden Administration will act expeditiously.


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