President Biden plans to appoint three new Federal Reserve officials as he seeks to remake the central bank at a critical economic time, a White House official familiar with the matter said Thursday.
If confirmed, his picks would result in the most diverse Fed board in the institution’s history.
The White House plans to nominate Lisa Cook, an economist at Michigan State University who has studied racial disparities and labor markets, and Philip Jefferson, an economist and administrator at Davidson College, to open seats on the Fed’s Board of Governors. Mrs. Cook and Mr. Jefferson are both black.
Mr Biden will also appoint Sarah Bloom Raskin as the Fed’s vice chair for supervision, a position created to help oversee the nation’s largest banks after the 2008 financial crisis.
Mr. Biden previously nominated Jerome H. Powell for a second term as Fed chairman and Lael Brainard, now governor, as central bank vice chairman. If confirmed in their positions, the Fed’s seven-person board would include four women, a black man and two white men – the most diverse team in the Fed’s nearly 108-year history. fed.
The administration had promised to make the Fed — historically dominated by white men — more like the public it served, and prominent lawmakers pushed for a focus on tougher financial regulation . The choices seek to offer along these dimensions.
“The headline is, and should be, about diversity,” said Kaleb Nygaard, a senior associate fellow at Yale’s Financial Stability Program who studies the Fed, explaining that staffing picks are a big moment for Mr. Biden. “This is the biggest chance he has to send a message about what he wants the Fed to focus on.”
Ms Raskin, who served as Fed governor under the Obama administration, is used to advocating for tougher banking supervision and is likely to usher in an era of tougher rules for titans of global finance, a priority of some powerful congressional Democrats.
If confirmed, Ms. Raskin would be tasked with determining the need for new financial regulation, enacting existing rules, and managing large, globally significant banks through their annual health checks, commonly referred to as stress tests.
Ms. Raskin would succeed Randal K. Quarles, who was appointed by former President Donald J. Trump and had criticized some of the rules imposed on banks after the 2008 financial crisis. As vice president, Mr. Quarles instituted a number of adjustments to regulation and supervision that have made supervision less onerous for banks, and which critics have argued as weakened financial rules.
Mr. Quarles’ term as vice chairman expired in October and he left the Fed at the end of December.
Ms. Raskin, a Harvard-educated lawyer who studied economics as an undergraduate at Amherst College, has spent time in the private sector. She is a former assistant secretary at the Treasury Department, where she focused on financial system cybersecurity, among other issues. She also spent several years as Maryland’s Financial Regulatory Commissioner. Ms. Raskin is married to Rep. Jamie Raskin, a Democrat from Maryland.
If confirmed, Ms Raskin will face a number of pressing issues. The vice president for oversight is the Fed’s primary link to banks and markets, a role that will grow in importance as the central bank considers issuing a digital currency. The VP will need to navigate new technologies, like stablecoins and cryptocurrencies, and assess what that means for banks.
The Fed develops climate risk scenarios to judge the exposure of banks, in which the vice president in charge of supervision will be heavily involved. And the person will have to work with other regulators within the Financial Stability Oversight Council – an inter-agency group focused on protecting against systemic financial risks – to address weaknesses in money market funds and other financial instruments. that the pandemic has laid bare.
Mr. Biden’s other picks for the Fed would also come into office at a difficult time, as unemployment is falling rapidly and inflation remains high, but millions of former workers are still out of work.
The Fed is considering how quickly to respond by removing support from the economy, and all governors hold a constant vote on monetary policy, giving new picks a potential say in the matter.
Dr Cook – reportedly the first black woman to serve on the Fed’s board – is well known for her work to improve diversity in the economy, including through the American Economic Association’s summer program , which helps prepare undergraduate students for potential careers. In the field.
She attended Spelman College and the University of Oxford, and earned a doctorate in economics from the University of California, Berkeley. She was an economist on the White House Council of Economic Advisers under President Barack Obama.
She hasn’t said much publicly about her monetary policy philosophy, though she has come out favorably on maintaining the Fed’s independence from politics. Her published work examines a wide range of topics: her doctoral dissertation focused on credit markets in Tsarist and post-Soviet Russia, while some of the work for which she is most famous focused on mortality and race, as well as than on segregation and lynching.
Dr Cook is an academic focused on macroeconomics, but “she’s not traditional – she’s looked at what we get wrong, sometimes, in economics,” said Julia Coronado, founder of research firm MacroPolicy Perspectives. , in an interview. before the announcement of the selection. “He’s someone who can handle himself, I think, in this room.”
Mr. Jefferson worked as a research economist on the Fed Board and studied at the University of Virginia and Vassar College. He has written on the economics of poverty, and his research has sought to determine whether monetary policy that stimulates investment with low interest rates helps or hurts less educated workers.
“My findings suggest opportunities are starting to open up for them as the labor market tightens,” he said in a 2018 interview with the Minneapolis Fed.
He also spoke candidly about his experience as a minority in economics.
“In graduate school at the University of Virginia, I was the only African American in the program all the time there,” he said in that 2018 interview, noting that it followed him in his professional appointments. “It’s been a long and lonely road professionally.”
And he said economics needs more diverse voices.
“We have to be seated around the table,” he said. “I think it’s critically important for public policy that we hear voices that represent diversity.”
With the new slate of candidates, what is arguably the main decision-making body of the global economy will become much more diverse in terms of race and gender.
There were briefly three women on the board in the early 1990s and again in the 2010s. The Fed has had three black board members in its history, all of them men, and none of them them only served on the board at the same time.
It’s unclear how the reworked board might alter the current monetary policy debate, which could involve tough choices about how quickly to slow down an economy struggling with rapid price increases. The Fed has signaled that it is ready to raise interest rates, which could stifle inflation but also slow the labor market and wage growth.
Fed Chairman Powell stressed this week that achieving full employment — a goal the Fed has emphasized in recent years as a way to foster inclusion and opportunity across the board of the economy – depended on maintaining price stability.
“If inflation becomes too persistent, if these high levels of inflation take root in our economy and in people’s thinking, that will inevitably lead to much tighter monetary policy on our part, and that could lead to a recession. , and that would be bad for workers,” Powell said during testimony before lawmakers on Tuesday.