“President Biden has nominated a reputable, qualified, impartial group of five candidates for the Federal Reserve Board of Governors who, together, will bring an extraordinary amount of skill, experience and expertise to the Federal Reserve,” the person said. Biden previously reelected Fed Chair Jerome Powell to a new term and elected Fed Governor Lael Brainard as Vice Chair.
By appointing Raskin, a former Fed governor and former deputy treasury secretary, Biden is deploying an aggressive regulator pushing for tighter oversight of Wall Street. That could appease supporters of financial regulation, who have criticized Powell for relaxing rules on big financial firms and not doing more to fight climate change.
Biden announced in November he would bring in Powell — a Republican who was first appointed Fed chairman by then-President Donald Trump — for another term as chairman, opting for continuity at the central bank because of an election year’s specter of rising inflation.
Still, Biden’s recent decisions would put a solid Democratic stamp on the central bank and sharpen the Fed’s focus on the well-being of American workers, as well as new, potentially explosive issues such as climate change and racial justice. They can also counterbalance a growing urge to trade more aggressively to combat rising prices, another possible source of tension on the board.
With inflation rising to its highest level in four decades, the Fed has started to withdraw its extraordinary support for financial markets and is expected to start raising interest rates in the coming months. It will be a careful balancing act for Fed officials aiming to cool the economy without triggering a recession. They are under political pressure from both sides of the aisle to lower prices while ensuring the job market continues to improve.
Once Biden formally announces the nominees for the three remaining vacant seats, the Fed would have five pending appointments, including Powell and Brainard, who are appearing for Senate nomination hearings this week.
Cook, a professor at Michigan State University, has had enthusiastic support from climate groups. Progressive activists have also praised her work on the economic impact of racial discrimination and her role as a mentor to many younger people of color in business. During the Obama administration, she served as a Senior Economist on the White House Council of Economic Advisers.
Jefferson, a former Fed economist, is a professor and administrator at Davidson College in North Carolina. According to his biography, his work focused on the “role of education as a buffer against unemployment, the impact of business cycles on poverty rates and the distribution of income between labor and capital”.
The nominees are likely to provoke skepticism from many Republicans who have criticized what they think the Fed is overstepping its mission.
“Members of the Fed Board of Governors should have exceptional qualifications and an accurate appreciation of the Fed’s narrow monetary policy and banking supervision mandates,” Sen. Pat Toomey (R-Pa.), the top Republican on the Senate Banking Committee, said in a statement on Thursday evening. “I will look closely to determine whether Ms. Cook and Mr. Jefferson have the necessary experience, judgment and political views to serve as Fed Governors.”
Toomey, who has previously expressed concerns about Raskin’s nomination, said he feared it would “abuse the Fed’s narrow statutory mandates on monetary policy and banking supervision to actively involve the central bank in capital allocation.”