President Joe Biden on Monday announced his intent to nominate Jerome Powell to a second four-year term as Federal Reserve chair.
Biden also will nominate Fed Gov. Lael Brainard to a role as vice chair, taking over a position Richard Clarida will vacate in January, the White House said Monday.
That leaves open three posts on the Fed’s board of governors: vice chair of supervision, a role Fed Gov. Randal Quarles vacated in October. Quarles has indicated he will leave the Fed next month, giving Biden another spot to fill. A third position has been open since before the Biden administration began.
Biden intends to announce nominees for those roles in early December, the White House said, adding he is committed to boosting the diversity of the central bank’s board.
"If we want to continue to build on the economic success of this year, we need stability and independence at the Federal Reserve — and I have full confidence after their trial by fire over the last 20 months that Chair Powell and Dr. Brainard will provide the strong leadership our country needs,” Biden said in a statement Monday.
Monday’s moves put to rest months of speculation regarding Powell’s future at the Fed. His nomination as recently as this summer was thought a certainty. But financial disclosure forms in September revealed that two regional Fed presidents — Eric Rosengren in Boston and Robert Kaplan in Dallas — traded stocks last year while also helping to set monetary policy, a practice that met the Fed’s code of ethics but raised concerns around potential conflicts of interest. Rosengren and Kaplan resigned.
The scandal deepened when further disclosures found Clarida moved between $1 million and $5 million from a bond fund into stock funds one day before Powell signaled the Fed might cut interest rates.
The Fed responded last month by barring its board governors, 12 regional presidents and senior staff from buying individual stocks, holding investments in individual bonds or agency-backed securities, or entering into derivatives.
The quick action wasn’t enough to sway lawmakers such as Sen. Elizabeth Warren, D-MA, who earlier called Powell a “dangerous man to head up the Fed,” adding that the stock-trading scandal indicates the central bank chief had “failed as a leader.”
However, more than half of the 12 Republicans on the Senate Banking Committee have said they would vote to confirm Powell if Biden were to nominate him. At least one Democrat, Sen. Jon Tester of Montana, has come out as a Powell supporter. And Treasury Secretary Janet Yellen has also signaled support for a second Powell term. The Senate confirmed Powell to his first term in 2017 by an 84-13 vote.
Brainard had been seen as Powell's chief rival for the Fed's top spot — Biden reportedly interviewed both on Nov. 4. While Brainard and Powell often haven't aligned on bank regulation — Brainard has opposed the easing of rules imposed during the 2007-08 financial crisis — the two generally agree on monetary policy, although Brainard is seen as more of a hawk on the impact of climate change.
In perhaps an aside meant to comfort Democrats who see a second Powell term as a sign that climate change would be less of a priority than under a Brainard Fed, Biden cited the two governors' "deep belief that urgent action is needed to address the economic risks posed by climate change," adding the central bank would "stay ahead of emerging risks in our financial system.”