Many of Powells harshest critics have stopped short of calling for his outright removal from the job the countrys most powerful economic position even as President Joe Biden is expected to decide on the appointment as early as September.
The divisions among progressives the one group that could make the most trouble for his reappointment provide an opening for Powell to win nomination to a second term and confirmation by the Senate, where he'd likely get support from most Republicans and moderate Democrats.
There is a lot of fear about being on the wrong side of the nomination fight if he is reappointed, said Jeff Hauser, director of Revolving Door Project, a leading voice against Powell, explaining why progressives haven't been more vocal in opposition. He argued that some groups arent joining the fight because theyre afraid they might lose influence with the Fed if Powell stays, an outcome that some see as inevitable because no firm challenger has emerged.
Hauser is part of a coalition of financial regulation advocates and climate activists who warn of the dangers of giving Powell a second term. But organizations more focused on the Feds interest rate policy and its full employment mandate are pretty sympathetic, said Skanda Amarnath, executive director of the group Employ America.
Its kinda like, Wow, this guy seems pretty aligned with what we want to do, Amarnath said.
Powell, who was first appointed to the Fed board by former President Barack Obama, won overwhelming bipartisan support for his confirmation in the Senate in 2018 after former President Donald Trump tapped him to become chair. Biden still might not opt to reappoint him, given the potential for angering key Democratic constituencies, including climate groups. But the pull could also be strong to keep an incumbent who has helped shepherd the economy through a pandemic and has the confidence of financial markets.
For now, many progressive lawmakers who will be key to Powells reappointment prospects, including Senate Banking Chair Sherrod Brown (D-Ohio) and Sen. Elizabeth Warren (D-Mass.), have been critical of the Fed chief but have not explicitly called for him to be replaced.
Its an approach that stands in stark contrast to previous nomination fights, such as in 2013, when former Treasury Secretary Larry Summers was the favorite to be nominated as Fed chair under Obama. Brown and Warren led a successful effort to push for Janet Yellen instead, a campaign that started as early as July of that year.
Brown holds a powerful hand since his committee will vet any Fed nominees. Hes using that influence, in part, to try to guide the full slate of open positions on the central bank, which include vice chair of supervision, which oversees regulations; and vice chair, a key voice on monetary policy.
Senator Brown will work with the Biden Administration to ensure our financial regulators not only reflect our nations diversity but are also ready to stand up to Wall Street, address income inequality and systemic racism, and make our economy more just for workers, his office said in a statement.
Brown would back Lisa Cook, an African-American professor of economics at Michigan State University, for one of the open Fed seats, according to a person familiar with the matter.
Some on the left have explicitly targeted Powell. Ocasio-Cortez along with others like Reps. Rashida Tlaib (D-Mich.) and Ayanna Pressley (D-Mass.) issued a strong statement on Monday calling for him to be replaced.
We urge President Biden to re-imagine a Federal Reserve focused on eliminating climate risk and advancing racial and economic justice, the lawmakers said in a joint statement to POLITICO.
They acknowledged that the Fed under Powell has made positive changes by steering the central bank toward a greater emphasis on reaching full employment. But they said they want to see someone in charge who is more aggressive on financial regulation and climate change.
Yet the statement comes late in the process. It also underscores that few other lawmakers have publicly taken the same step. Warren in a recent interview with Bloomberg TV declined to formally call on Biden to dump Powell, though she said she wanted someone who was effective on both monetary policy and financial regulation.
My concern is that, over and over, he has weakened regulation, she said of Powell. We need someone who understands and uses both the monetary policy tools and the regulatory tools to keep our economy safe.
She also praised Fed board member Lael Brainards strong and powerful dissents against some of the Feds recent deregulation, though she didnt explicitly endorse her candidacy for chair.
Powell, pressed by Brown at a July hearing about some of the Feds deregulation, said banks still have a healthy amount of capital, pointing to the central banks moves during the pandemic to limit shareholder payouts by the biggest lenders. So, the financial system is strong, and the banks are strong, he said.
Allies of Brown and Warren say they have ways they can sway regulatory policy within and beyond the Fed, having helped install candidates such as Securities and Exchange Commission Chair Gary Gensler, who is seen as a strong check on Wall Street.
Warren has worked behind the scenes to place a small army of her former aides in key government roles, including Bharat Ramamurti as deputy director of the White House National Economic Council and Julie Siegel as Treasury deputy chief of staff. There are signs of Browns fingerprints as well in nominees like Graham Steele, a former aide to the senator who has been tapped for a key Treasury job.
Pressure from the left has largely focused on policies that progressives would like to see the Fed carry out, rather than campaigns for or against any particular candidate, though much of it is implicitly anti-Powell.
For us, the issue is less who is appointed than what their agenda is, said Benjamin Dulchin, director of the Fed Up Campaign, an influential coalition of labor and community groups.
Dulchin suggested the message was meant just as much for the president: push for a greater commitment from the Fed to help disadvantaged Americans and hold Wall Street accountable.
Whoever Biden appoints, whether its Powell or somebody else, its important that they come into that position with a clear understanding from Biden of what additional steps he as president would like to see the Fed take, he said.
Still, some of the progressive opposition to Powell has been public and vehement. Groups like Revolving Door Project and Action Center for Race and the Economy have joined with climate activists to push against a second term for the Fed chief.
Climate groups argue that the Fed should use its regulatory powers to slow the flow of money to the fossil fuel industry, while groups that support strong financial regulation like Americans for Financial Reform and Better Markets have put out extensive reports outlining where they think Powell has fallen short.
Deregulation under Powell needlessly and dangerously made the financial system significantly less safe, according to a report from Better Markets, which has been highly critical of Powell but has not formally come out against him.
Some others who have been quieter would also prefer someone other than Powell. The clearest option is Brainard; progressive groups across the spectrum of policy issues say they could accept the prospect of her being elevated to chair. But the campaign on her behalf has been muted.
There is a bunch of quiet support behind the scenes for Brainard that would become very vocal if she were chosen as chair, said Justin Guay, director of global climate strategy at the Sunrise Project.
But opposition is mounting against the prospect of Brainard being named as the Feds regulatory chief alongside Powell as chair, underscoring that their trust of her only goes so far. Thats not what were looking for, Fed Ups Dulchin said.
As for Powell, even within organizations, views of him might differ. Dean Baker, senior economist at the Center for Economic and Policy Research, penned an enthusiastic defense of the Fed chair earlier this year. Revolving Door Project one of Powells most prominent detractors is part of the center.
And a sizable faction on the left argues that a push toward full employment, including for Black people who have historically seen unemployment at twice the rate of white people, is by far the most important job of the central bank.
"President Bidens litmus test for the next Fed Chair must be whether the nominee will commit to creating a high-pressure enough labor market to narrow racial gaps in wages and employment, said Lindsay Owens, executive director of progressive think tank Groundwork Collaborative and a former senior adviser to Warren.
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Clash among progressives is boosting the Fed chiefs path to keeping his job - POLITICO