"Reappointment of Fed Chair Powell Clouded by Opposition from US Progressive Lawmakers"

WSJ "Senators Warren and Brown Oppose Chairman Powell's Deregulation Stance"
Bipartisan Support and Numerous Economic Challenges Increase Chairman Powell's Chances of Reappointment

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] The possibility of Jerome Powell's reappointment as Chair of the Federal Reserve (Fed) has been clouded due to opposition from progressive Democratic lawmakers in the U.S.

On the 10th (local time), the Wall Street Journal (WSJ) reported that Senator Elizabeth Warren is leading the opposition against Powell's reappointment, whose four-year term ends in February next year.

Appointed during former President Donald Trump's administration, Chair Powell has generally received high marks within the Biden administration and the Democratic Party for policies focused more on reducing unemployment. However, the progressive camp is reportedly dissatisfied with Powell's easing of financial regulations.

Senator Warren recently mentioned in a broadcast interview her opposition to Powell's deregulation policies.

Senator Sherrod Brown, a Democrat and Chair of the Senate Banking Committee, is also among the progressives urging the Fed to implement stronger regulations.

According to WSJ, 'Powell opponents,' including former Senate policy advisors from the Democratic Party, have recently contacted influential figures such as Senators Warren and Brown, requesting pressure on the White House to replace the Fed Chair.

Elizabeth Warren Photo by AP Yonhap News

They prefer a candidate for the next Fed Chair who better aligns with Democratic policy lines and codes, including financial regulation, climate change, and closing racial wealth gaps.

Eric Gerding, a fellow at the U.S. financial think tank Americans for Financial Reform, said Powell's renomination "would be a very disappointing outcome for those who support the Biden administration's policy stance on climate change and financial regulation," adding that "Powell's reappointment would mean one less vote supporting sustainable and healthy financial system regulation."

WSJ reported that if Powell fails to secure reappointment, a leading candidate for the next Fed Chair is Fed Governor Lael Brainard.

Governor Brainard has recently strongly supported the Fed's development of a Central Bank Digital Currency (CBDC), showing a temperature difference with Powell, who has maintained a more cautious stance. Senator Warren has also recently expressed many positive views on CBDC.

Additionally, although Governor Brainard is known to share similar views with Powell from a fiscal policy perspective, there are indications of political differences between them.

Rayall Breiner, Fed Director
Photo by Reuters Yonhap News

James Sweeney, an economist at Credit Suisse, said, "Governor Brainard's nomination as Fed Chair would create meaningful differences," adding, "Brainard, a Democrat, holds views more aligned with the ideological tendencies of her party compared to Powell, a Republican."

However, within the Biden administration, considering the challenging economic issues such as the infrastructure spending bill, inflation, and the resurgence of COVID-19, many believe Powell's renomination is still highly likely.

Janet Yellen, Treasury Secretary and former Fed Chair, has also publicly supported Powell.

Powell's broad support from both Republican and Democratic lawmakers is another variable. Considering that 68 of the 84 senators who voted to confirm Powell in 2017 are still in office, the possibility of his reconfirmation this time is high.

Former Democratic Representative Denny Heck said, "There would be no problem if President Biden renominates Powell."

WSJ analyzed that if Powell is reappointed, Governor Brainard is likely to be appointed as Fed Vice Chair or Vice Chair for Supervision.

This content was produced with the assistance of AI translation services.