(Bloomberg) -- Jerome Powell, President Donald Trump’s choice to become Federal Reserve chairman, will have significant advantages once the Senate confirmation process gets started, even though he wasn’t the preferred choice of some Republicans.
Powell, a Republican, is already a member of the Fed Board of Governors, nominated by Democratic President Barack Obama, and is likely to get support from both parties. He was confirmed in 2012 by the Senate 74-21 to fill an unexpired term. In 2014, he was confirmed 67-24 for a full 14-year term. In both instances, all but one of the opponents were Republican.
There could be some uncomfortable moments when Powell sits down with the Banking Committee, which will hold hearings on the nomination. Members Pat Toomey of Pennsylvania and Dean Heller of Nevada voted against him in 2012. Heller also voted against him in 2014, as did the current chairman of the Banking committee, Michael Crapo of Idaho, and panel member Tim Scott of South Carolina. All of the five current top Senate GOP leaders, including Majority Leader Mitch McConnell of Kentucky did so as well.
Scott, who had been hoping Trump would choose Stanford economist John Taylor, said Thursday he had a lot of questions for Powell.
"He was in my opinion bullish on Dodd-Frank and implementing every aspect of it, as well as the easy money policies that have maintained the artificially low interest rate environment," Scott said.
Still, the panel has been approving Trump’s top financial-post picks with bipartisan votes. Randal Quarles was backed by the committee 17-6, including five Democrats in support, to become Fed vice chairman for supervision. The full Senate confirmed him 65-32.
Trump plans to name Powell as his nominee Thursday, according to three people familiar with the decision.
On the Fed Board, Powell has earned a reputation as a non-ideological and pragmatic policy maker. Even if he doesn’t garner broad support to head the central bank, a Senate rule change in 2013 ended filibusters of executive-branch nominees so he could be confirmed with a simple majority.
Some lawmakers, including Toomey, have lobbied behind the scenes against Powell, who has been criticized by Republicans for failing to stand up to Daniel Tarullo, the former Fed governor who pushed for tougher oversight of financial firms as the central bank’s point man on financial regulation. Powell is also opposed by conservatives who would like to see a more hawkish, rules-based monetary policy.
The term of the current Fed chair, Janet Yellen, expires Feb. 3. Based on past practice, the confirmation process will take about two months or longer to play out.
The first hurdle will be testimony before the Banking Committee, led by Crapo, an Idaho Republican and a conservative who for years has been pushing for a change in economic policy and in the Fed’s approach to financial regulations. A simple majority on the 23-member panel is needed to advance the nominee to the full Senate for a vote, which means the defection of just one Republican would torpedo confirmation if all Democrats vote no.
But Democrats on the panel are spread across the ideological spectrum, opening opportunities for Powell to pick up support.
The top Democrat on the committee, Sherrod Brown of Ohio, is a leading progressive as is Senator Elizabeth Warren of Massachusetts. Yet there are also a number of moderates, including three running for re-election next year in states Trump won: Jon Tester of Montana, Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana. All three have supported many of Trump’s nominees this year, including Quarles.
Brown said he hasn’t decided whether he’ll support Powell.
“I want to hear from Powell about what kind of changes he’ll make or whether he’s going to change direction,” Brown said.
He said he also wants to hear how Powell plans to utilize Quarles as head of banking supervision, how he’ll approach regulatory issues and what he thinks about interest rates and the state of the economy. Powell’s views on the future of the Dodd-Frank banking overhaul will be a particular area Brown said he wants to explore.
“Unfortunately the Trump financial regulators throughout the government have tried to start to scale back Dodd-Frank, and I want to see what Powell plans on regulatory issues are,” he said.
A Banking Committee confirmation hearing would be scheduled after the White House submits paperwork on the nominee, including a lengthy financial disclosure, a background check and responses to a questionnaire. Each member of the panel also can ask for a private meeting. After the hearing, individual senators can seek answers to follow-up questions before the committee votes on whether to send the nomination to the full Senate.
The 2013 Senate rule change means just 51 votes are needed for confirmation, rather than 60, in a chamber Republicans control 52-48. That has allowed a number of top Trump administration officials to squeeze through this year, including Education Secretary Betsy DeVos on a 51-50 vote in February with Vice President Mike Pence casting the tie-breaker.
A Washington native, Powell is a former investment banker and partner at the Carlyle Group. He was an assistant secretary and undersecretary of the Treasury under President George W. Bush. He also was a visiting scholar at the Bipartisan Policy Center in Washington, where he focused on federal and state fiscal issues.
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