As the White House weighs the potential renomination of Jerome Powell as chair of the Federal Reserve, officials are discussing the use of openings on the board to reshape the central bank to closer align with administration priorities such as inequality and tighter banking regulations, according to people familiar with the matter.
President Joe Biden currently has one vacant Fed governor seat to fill, and could potentially replace three more top central bank officials in the coming year, depending on how much he wants to revamp the Fed’s leadership. Powell and Fed vice chairs Richard Clarida and Randal Quarles all have terms that will expire in coming months.
With several seats opening up, the White House isn’t looking at the chairmanship in isolation, but rather what mix of governors to appoint so as to reshape policy toward the administration’s agenda, according to the people, who spoke on condition of anonymity.
While no decision appears imminent, the lack of any clear candidates to replace Powell, along with his expressed interest in keeping his job, indicate that a renomination is possible. That would be in keeping with a decades-long tradition of presidents maintaining continuity in Fed leadership—one that former President Donald Trump broke.
One key influencer on Fed appointments, Treasury Secretary Janet Yellen, has told those close to her that she has a good relationship with Powell, and is pleased with how he has steered monetary policy through the pandemic-induced crisis, according to two people familiar with the matter.
Keeping Powell, 68, would remove a chance to install someone from a minority in the job for the first time in history, however, and could stoke criticism from progressive Democrats. One option to reduce potential tensions could be to present a package of appointments that addresses the need for diversity, people familiar with the matter said. All Fed board nominations are subject to Senate confirmation.
With the right mix of candidates, Biden may be able to persuade progressive allies in Congress and outside the White House to support his choices. That’s how the White House is approaching a decision that history suggests is expected this fall on whether Powell is asked to stay, or if the administration proposes a new candidate, according to people familiar with the matter.
Spokeswomen at the White House and Treasury and White House declined to comment.
“Nominations are made in a group—but usually the group is made to protect one or more of the nominees,” said former Fed Governor Laurence Meyer. In the 1990s, Meyer and Governor Alice Rivlin were part of package with Fed Chair Alan Greenspan, who was considered hawkish on policy by senators. The nomination of Powell, a Republican, to the board in 2011 was yoked with Democrat Jeremy Stein.
Yellen, who was Powell’s predecessor at the Fed’s helm, along with White House Chief of Staff Ron Klain and National Economic Council Director Brian Deese are expected to play key roles in making recommendations to Biden as his decision nears, the people said.
Cecilia Rouse, Jared Bernstein and Heather Boushey of the White House’s Council of Economic Advisers, and Bharat Ramamurti, an NEC official who previously worked for Senator Elizabeth Warren, will also be part of the process, they said.
Yellen and Powell were colleagues at the Fed board for six years before she left in early 2018 after Trump replaced her with Powell as chair. Since Yellen became Treasury chief, the pair have kept up a tradition of weekly discussions between the secretary and Fed chair.
The pandemic crisis has highlighted long-standing disparities across the U.S. economy, a major focus for Biden and his top advisers. The unemployment rate for Black workers, who have a disproportionate share of lower-wage jobs and union membership, was double that of their White counterparts during much of the past 50 years—in part because the Fed has historically tightened monetary policy just as the benefits of economic growth began to reach lower-income workers.