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BREAKING: Biden Re-nominates Powell as Fed Chair; Brainard Picked for Vice Chair

November 22, 2021

This morning, President Biden announced he will nominate Jerome Powell for a second term as Chair of the Board of Governors of the Federal Reserve. Current Fed Governor Lael Brainard will be nominated as Vice Chair.

In recent days, reports indicated Biden would pick either Powell or Brainard as the next chair, providing some continuity with either decision. Staying with Powell revives the practices of a President re-nominating Fed chairs for a second term, which lapsed when Janet Yellen was not reappointed by President Trump. The move could be characterized as a return to tradition, but it also means the administration will have an easier time to confirm Powell with plenty of GOP support. Senate Banking Committee Ranking Member Pat Toomey (R-PA) already announced his support for Powell, despite a few policy differences:

While I have strongly disagreed with Chairman Powell’s decision to continue the Fed’s emergency accommodative monetary policy—long after the economic emergency had passed—Chairman Powell’s recent comments give me confidence that he recognizes the risks of higher and more persistent inflation and is willing to act accordingly to control it. I look forward to supporting his confirmation.

Biden likely will draw fire from the left, as some progressives have opposed his nomination, including Sen. Elizabeth Warren (D-MA), who called Powell a “dangerous man”. Senators Jeff Merkley (D-OR) and Sheldon Whitehouse (D-RI) also came out against Powell. However, Senate Banking Committee Chair Sherrod Brown (D-OH) seemed to support Biden’s decision, which will likely temper progressive criticism: 

Chair Jerome Powell has led our economy through a historic pandemic, and under his and President Biden’s leadership, unemployment has fallen and workers are seeing increased bargaining power. The Federal Reserve must continue to help steer our economic recovery in the right direction – toward full employment and an economy that empowers workers and their families. I look forward to working with Powell to stand up to Wall Street and stand up for workers, so that they share in the prosperity they create

Brainard also won praise from Brown. While Toomey noted his concerns with Brainard’s regulatory policies, her nomination to Vice Chair is unlikely to draw fierce GOP opposition, especially since she is already a voting member of the Board.

Three Federal Reserve Board Vacancies to Go
The White House press release gave an early December timeline to name nominees who will fill three vacancies on the Fed’s Board of Governors, which includes an open seat, the seat Randy Quarles will vacate at yearend, and current Vice Chair Richard Clarida’s term that expires in January 2022.

The administration also has yet to name a new Vice Chair of Supervision to serve as the Fed’s lead banking regulator. The position has been vacant since Quarles’s term as Vice Chair expired in October. There was speculation that Brainard would be selected for the post before being nominated at the Vice Chair of the Board. Biden is expected to announce his plans on the Vice Chair of Supervision along with additional nominees in early December.

The new slate of nominees could tip the balance of the Board to Democratic-leaning from the current dominance of Trump nominees. While the effect on monetary policy may be limited, the Board’s role as a financial regulator could lead to additional regulation and higher bank capital requirements given a majority of Biden/Obama appointees.

President Biden announced he will nominate Jerome Powell for a second term as Chair of the Board of Governors of the Federal Reserve. Current Fed Governor Lael Brainard will be nominated as Vice Chair.

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