Biden could start reshaping the Fed next month — and progressives will want a say

The White House declined to comment on this story and has not publicly indicated whether the administration is looking for a new chairman. The closest the Biden administration has come to a public comment may have been Treasury Secretary Janet Yellen’s comments to CNBC last month.  

Yellen, who made history as the first woman to lead the Fed, said the central bank has “done a good job” under Powell’s tenure.

Asked whether she supports Powell for a second term, Yellen said she would keep that opinion private for now. She will likely play an outsized role in advising the president since Powell and Brainard served as Fed governors while Yellen was chair of the central bank. 

The Treasury Department declined to comment further for this story.

Yellen’s praise for the Powell Fed may have deflated some progressive Democrats, who hope Biden takes the opportunity to install a member of his own party.

“There are two dimensions. And one is how much [Powell] has aided and abetted the Fed as a whole in deregulating further than perhaps Congress told them to,” said Mike Konczal, director of macroeconomic analysis at the left-leaning Roosevelt Institute.

“The second question is whether the Fed could be more creative in how it uses its powers,” he continued. “Can the Fed be much more aggressive on climate change? Could it have, in the crisis, gone in a much more aggressive manner in solidifying the balance sheets of states and local municipalities.”

“Those are two separate questions,” Konczal said. “And progressives feel Powell has failed on both.”

Despite progressive concerns, Powell has a long list of allies on both sides of the political aisle, and still viewed on Wall Street as likely to maintain his chairmanship. His commitment to insulating the Fed from political influence and his record during the 2020 recession earned him praise from Republicans and Democrats alike.

Former President Donald Trump, who promoted Powell to lead the Fed, repeatedly attacked the Fed chief for what Trump considered steep interest rates. But most congressional Republicans, including North Carolina Rep. Patrick McHenry, have signaled their continued support for the 68-year-old Powell.

“You have earned and deserve another term as chair of the Federal Reserve,” McHenry, the top Republican on the House Financial Services Committee, said in July. “You have proven to be a steady hand throughout this pandemic and ongoing recovery, and you’ve defended the independence of the Fed.”

Article source: https://www.cnbc.com/2021/08/06/biden-could-start-reshaping-the-fed-next-month-and-progressives-will-want-a-say.html