Washington, DC – Former Federal Reserve Governor Sarah Bloom Raskin and two Black economists, Lisa Cook and Philip Jefferson, have been selected by US President Joe Biden to serve on the board of the world’s most powerful central bank in a landmark demographic shift.
According to two people with knowledge of the matter, the White House delivered the nominees to the Senate late on Thursday.
Candidates for the seven-member panel, which has significant influence over the world’s largest economy, would be the first in its 108-year existence to represent a wide range of ethnicities, as well as women.
In the wake of the COVID-19 epidemic, Vice President Biden has made a number of personnel changes in response to the unanticipated rise in inflation. As a member of the Council of Economic Advisers, he has the opportunity to make a lasting impression on a council that sets global economic policies, particularly interest rates.
This group of five nominees, according to the source familiar with the nominations, is “serious, qualified, nonpartisan,” and will “add an exceptional level of skill, experience, and competence to the Federal Reserve,” President Biden has nominated.
To combat inflation, keep the economy stable during the pandemic, and ensure that all employees benefit from our economic progress, they will prioritise the independence of the Federal Reserve.”
The White House has declined to provide any additional information.
Top Republicans on the Senate Banking Committee immediately attacked the nominations, foreshadowing a potentially contentious nomination process ahead in the Senate, which Democrats control only because of Vice President Kamala Harris’ dual role as president.
A statement from Senator Pat Toomey of Pennsylvania cited “serious concerns” about Raskin’s ability to keep banks from lending to oil and gas companies, and he added that he thinks she will try to derail Fed policies aimed at ensuring maximum employment and price stability. “I have serious concerns” about Raskin, he said.
As part of their questioning of Fed Governor Lael Brainard, who has been nominated to fill the No. 2 position, Toomey and other Republicans pressed her on her support for climate risk research. He also expressed doubts about Cook and Jefferson, saying he would “closely scrutinise” their qualifications to serve as Fed governors, including their “experience, judgement, and policy opinions.”
An Even More Diverse Federal Regulatory Council
If confirmed, Cook would be the first black woman to serve as a Federal Reserve board member. It would be the first time in more than 15 years that a Black man has been on this panel, and he is a professor and senior administrator at Davidson College in North Carolina.
For the first time, the seven-member Board of Governors would have four female members thanks to Biden’s selections. The Fed’s board of directors currently consists of only five people, three of whom are women and all of whom are white.
Professor Larry Katz of Harvard University observed, “It’s apparent that the guard is shifting.” These are “groundbreaking new nominees who will add significant viewpoints and representation to the board,” according to the statement.
In an interview with Reuters, former Fed governor Elizabeth Duke said Biden’s picks will “inspire more and more diverse people to get into economics and study the practise of economics.” Duke served under Raskin as Fed governor.
To make the Federal Reserve more American comes at an important moment. Inflation is at an all-time high. Although the number of unemployed Americans has decreased, firms in the United States have cut 3.6 million jobs since the outbreak of the pandemic.
Concerned about maintaining price stability while also increasing employment, the Fed is considering how quickly and how far to hike interest rates and tighten monetary policy in order to curb inflation without jeopardising the economy.
Current leadership has already indicated that they are ready to begin raising interest rates as early as March, which may stress financial markets and influence the pace of the recovery during an election year in which control of Congress is at stake… The more you read, the better.
Jerome Powell, the Fed’s chairman since last year, is leading the pivot and will begin his second four-year term as chairman on January 1. The Senate Banking Committee held Powell’s confirmation hearing on Tuesday, while Lael Brainard, who Vice President Biden has nominated to be the central bank’s vice chair, came before the panel on Thursday..
Progressives had hoped for a more diverse group of Fed nominees, and Biden’s selections on Thursday are a step in that direction.
In comparison to Randal Quarles, the Fed’s previous vice chair of supervision, who stepped down at the end of last year, Raskin, who served as a Fed governor for four years before being named deputy Treasury secretary from 2014 to 2017, is likely to exert more pressure on Wall Street.
While growing up in the South, Cook witnessed the brutality of school desegregation as a child, and has written extensively on this topic. Throughout his career, Jefferson has written extensively about salaries and poverty.
Ex-Chair of Trump’s Council of Economic Advisers Kevin Hassett said Jefferson was a “extremely clever economist” who should be promptly confirmed by the Senate.
I think he’s exactly the kind of person the Federal Reserve needs.”