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Biden seeks to replace the Fed with a historically diverse list of candidates

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WASHINGTON (Acesparks) – Joe Biden on Friday nominated former Federal Reserve Governor Sarah Blum Raskin as the Fed’s chief regulator and economists Lisa Cook and Philip Jefferson as members of its board. bank.

FILE PHOTO: View of the Federal Reserve Building in Washington, DC, September 16, 2008. / Jim YOUNG / Photo file

The appointments, which may face some opposition from Republicans in the Senate, fill a seven-member panel that will have a major impact on the world’s largest economy and make the Fed’s top leadership the most diverse in terms of race and race. Sex in its 108-year history. Both Cook and Jefferson are black.

Biden’s choice for the Fed came after his decision to nominate Jerome Powell for a second term as central bank governor and to appoint Governor Lael Brynard as vice president, giving him a permanent foothold in the economic policy-making body – especially interest rates. about – this is reflected all over the world.

The appointments were announced as Biden’s own plans for the post-pandemic economy were driven by an unexpected rise in inflation and a guerrilla scandal in Congress – a factor that could also emerge in the nomination process.

“This group brings much-needed experience, feedback and leadership to the Federal Reserve System, while at the same time bringing in a variety of ideas and perspectives that have never been seen before on the board,” Biden said. “They will continue to do important work to guide us on the path to a strong and sustainable recovery, while making sure that price increases do not sustain in the long run.”

TASSIKLASH TUSSLE

The nominees were immediately fired by the top Republican on the Senate Banking Committee, which showed a potentially difficult and partisan approval process in the legislature that Democrats control only because of Vice President Kamala Harris ’dual role as Senate President.

Pennsylvania Sen. Pat Tumi said he was “seriously concerned” about Raskin and said he believed banks would try to stop lending to oil and gas companies and deviate from the two congressional mandates that run the Fed’s main mission. – maximum employment and price stability.

Toomey and other Republicans asked Brainard several times in his affirmation hearing here on Thursday that he would support climate risk research. As for Cook and Jefferson, Toomey will “closely examine” whether they have the “experience, considerations and political views necessary to work as Fed governors.”

Democrats in the Senate backed Elizabeth Warren of Massachusetts, who has long sought to strengthen banking supervision, calling Ruskin “a tough and well-thought-out financial regulator with decades of experience at the state and federal levels.”

MORE DIFFERENT FED BOARD

Cook, a professor of economics and international relations at Michigan State University, will be the first black woman to serve as Fed governor. Jefferson, a professor and senior administrator at Davidson College in North Carolina, is the fourth black man sitting on the panel and will be the first in more than 15 years.

Biden’s selection means that four women will also be the first to join the seven-member board. There are currently only five members of the Fed board, all in white, but as announced earlier by Vice President Richard Clarde, after leaving the board on Friday, their number will drop to four – two men and two women.

“It’s definitely a change of guard,” said Harry University professor Larry Katz. It is “a set of new candidates that will bring significant prospects and representation to the board.”

DOWNLOAD

Trying to make the Fed look more like America is at a critical juncture. Inflation has reached its highest level in decades. Unemployment has fallen, but U.S. employers have less than 3.6 million workers in the pre-coronavirus pandemic.

The Fed is discussing how fast and how much to raise interest rates and tighten monetary policy to curb inflation without short-circuiting the labor market in any other way, a process that could continue before Raskin, Cook and Jefferson approve it.

His current leadership has already said it is ready to start raising rates from March, testing financial markets and returning from extreme comforts that could affect the pace of recovery in an election year that is under the control of Congress.

Powell, who is running for the Senate’s banking committee on Tuesday, is leading the way, saying the economy has not required broad support since the pandemic began, an idea that is now prevalent among Fed officials.

Analysts do not expect any of the newcomers to rely on this idea, at least initially, if they are confirmed.

“Inflation is so high and political pressure on the Fed is so strong (including by Democrats) that we doubt they will act hard against the will of the (policy-making) committee,” writes Cornerstone Macro economist Roberto Perley. “While all (candidates) have expressed views in favor of a broader expansion of the labor market, we can expect them to face serious tensions in the future.”

Raskin, who left the Fed for four years before being appointed Deputy Treasury Secretary from 2014 to 2017, is expected to have tighter controls on Wall Street than former Fed Vice President for Supervision Randal Quarles. at the end of last year.

Cook has written extensively about the economic consequences of racial inequality and gender inequality, and the grown-up child lived through the violence of school desegregation in the southern United States. Jefferson, who worked as a Fed researcher at the beginning of his career, wrote a lot about wages, poverty and income distribution, although he did not publish it recently.

Kevin Hassett Jefferson, who chaired the Economic Advisory Board under former President Donald Trump, said he was a “brilliant smart economist” and a serious academic who needed to be approved by the Senate quickly.

“He’s an honorable and serious man who should be in the Federal Reserve.”

Andrea Shalal reports; Additional report by Trevor Hunnicutt; Graphic by Ally Levine; Edited by Dan Burns, Leslie Adler and Paul Simao

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