Progressives Split on Powell’s Renomination to Fed Chair

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Progressives are starting to divide on whether Federal Reserve Chair Jerome Powell should be renominated by President Joe Biden for a second term.

Seven different climate-activist groups, including the Sierra Club, on Thursday raised questions about Powell’s renomination, demanding a stronger climate leader at the head of the central bank.

“If Joe Biden’s executive branch is going to live up to its commendably bold climate commitments, they will need a climate hawk as chair of the Federal Reserve,” Jeff Hauser, executive director of the Revolving Door Project, said in a press release. “Nothing about Powell’s record at the Fed or as a Republican private equity titan before then suggests he is such a leader.”

The Revolving Door Project is part of the left-leaning Center for Economic and Policy Research in Washington and a day earlier its co-founder, Dean Baker, threw his support behind Powell for a second term as chair.

“It would be good for the economy if Powell were reappointed, and if Biden announced this decision as soon as possible,” Baker said. He highlighted how Powell has shifted the central bank’s focus to “running the labor market as hot as possible without triggering inflation.”

Open Seats

Biden has an opportunity to reshape the leadership of the Fed board with terms for Powell -- and vice chairs Richard Clarida and Randal Quarles -- expiring in coming months. There is also a vacancy on the seven-member board.

The decision is politically intricate because Powell has largely sided with vice chair of supervision Quarles’ efforts to smooth out rules for the financial system, while Fed Governor Lael Brainard, the only official on the board now appointed by a Democrat, has dissented against many of those changes.

Progressives Split on Powell’s Renomination to Fed Chair

Powell has also received a thumbs-up from William Spriggs, a Howard University professor and the chief economist at the AFL-CIO, the country’s largest federation of labor unions.

In their statement Thursday, the climate groups argued that the Fed has lagged behind other big central banks in its climate-risk policies and criticized the Fed for failing to use its powers to address the crisis.

Baker in his essay attempted to head off climate criticism of Powell.

“It would be great to have a central bank that actively promoted clean energy and sought to penalize fossil-fuel companies, but this is not a power that has been given to the Fed by Congress,” he wrote. “While it can arguably do this with the power it has, it would be virtually certain to lose this power very quickly if it went this route.”

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