US Think Tank's 4-Year Review of Fed Chair Powell: "Failing Grades on Bank Regulation and Climate Change Response"

Positive Evaluation of COVID-19 Response "Monetary Policy Focused on Labor Market Will Ultimately Reduce Wealth Gap"

[Asia Economy Reporter Byunghee Park] A U.S. think tank has released a report evaluating the four-year term of Jerome Powell, Chairman of the U.S. central bank, the Federal Reserve (Fed).

The think tank Better Markets evaluated Powell’s four years in a 55-page report consisting of about 23,000 words.

Better Markets sharply criticized the Fed’s banking regulations under Powell’s leadership, rating them as very poor. The evaluation of climate change response measures was also harsh. Better Markets pointed out that Powell’s Fed responded inexplicably slowly. On the other hand, it praised the Fed’s response to former President Donald Trump’s attempts to undermine the Fed’s independence as exemplary.

It also gave a favorable evaluation for the Fed’s swift and proactive measures to prevent the recession caused by COVID-19 and for operating monetary policy with a new focus on the labor market, emphasizing the positive effects of these actions.

Although Better Markets titled the report “Should Federal Reserve Chairman Jay Powell be Reappointed,” it did not take a position on whether he should be reappointed.

One of the report’s authors, Dennis Kelleher, stated that the report intentionally did not draw a conclusion, explaining that the purpose of the report is to allow Powell’s reappointment to be decided through a substantive, comprehensive, and thorough process. Kelleher worked on President Joe Biden’s transition team.

Powell’s term expires in February next year. Discussions surrounding his reappointment are heating up. Bloomberg News reported the previous day that Treasury Secretary Janet Yellen recently conveyed to senior White House officials her support for Powell’s reappointment, significantly increasing the likelihood of his renewal. Republican Senator Steve Daines, a member of the Senate Banking Committee, also sent a letter to President Biden urging Powell’s reappointment.

It is customary for Fed chairpersons to be reappointed. However, former President Trump broke this tradition by not reappointing Janet Yellen, who was appointed by the Democratic administration, and replacing her with Powell. Yellen became the first Fed chair in 40 years since William Miller in the late 1970s to complete a single term without reappointment.

Progressive figures argue that President Biden should replace Powell due to reasons including easing of banking regulations, a less proactive stance on climate change compared to other central banks, and causing asset price increases such as in stocks, which expanded wealth inequality.

Better Markets shares similar views with progressives regarding regulation and climate change response. However, it holds a different view on the claim that bold economic stimulus caused asset price increases that expanded wealth inequality.

In the report, Better Markets emphasizes that the Fed under Powell will not shift to tightening monetary policy until full employment is achieved, and evaluates this as ultimately helping to reduce wealth disparity.

The White House has not yet announced a specific position on when President Biden will decide on Powell’s reappointment. However, local forecasts suggest that the decision will be made around Labor Day, October 6.

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