Biden Considers Appointing Lael Brainard, Former Treasury Deputy Secretary, as Fed Vice Chair

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Entrusted with Critical Roles Including Strengthened Bank Supervision and Climate Change Response

Sarah Bloom Raskin, Former U.S. Deputy Secretary of the Treasury
[Photo by Reuters]

[Asia Economy New York=Correspondent Baek Jong-min] It has been reported that U.S. President Joe Biden is considering Sarah Bloom Raskin, former Deputy Secretary of the Treasury and former Federal Reserve (Fed) Board member, as Vice Chair for Supervision at the Fed.

The Wall Street Journal (WSJ) cited sources on the 28th, reporting that President Biden is likely to appoint former Treasury Deputy Secretary Raskin, Lisa Cook, a professor at Michigan State University, and Philip Jefferson, a professor at Davidson College, to fill three vacant Fed Board seats.

For the position of Vice Chair for Supervision, Raphael Bostic, President of the Atlanta Fed, Michael Hsu, Acting Comptroller of the Currency, and Nellie Liang, Treasury Deputy Secretary, were also mentioned as potential candidates, but Raskin is considered the strongest contender.

Initially, Lael Brainard, a current Fed Board member, was widely expected to become Vice Chair for Supervision, but Brainard was nominated as Vice Chair for Monetary Policy.

Raskin is expected to lead changes in bank regulation rather than Fed monetary policy.

She is a 'card' that can satisfy progressive figures critical of the Fed's easing of bank supervision.

President Biden is interpreted as aiming to balance power among Fed Board members by appointing two progressive women as Fed Vice Chairs instead of deciding on the reappointment of Chairman Powell, which was opposed by progressives.

According to WSJ, Senator Elizabeth Warren, who opposed Chairman Powell's renomination, sent a letter to President Biden recommending Raskin for the Vice Chair for Supervision position.

During her tenure as Deputy Secretary of the Treasury, Raskin was responsible for cybersecurity-related tasks. As a Fed Board member, she assisted then-Chairman Ben Bernanke in supporting economic recovery after the global financial crisis and contributed to the completion of the Dodd-Frank financial regulatory law.

She has repeatedly argued that the Fed should take the lead in addressing climate change. Raskin also criticized the Fed's emergency lending measures during the COVID-19 response and emphasized the need to foster innovative growth companies.

WSJ predicted that since Raskin has previously passed Senate confirmation twice, there is likely to be less resistance from Congress.

A major foreign news outlet forecasted that the next Fed Vice Chair for Supervision will have the important responsibility of reviewing banks' allowance for equity investments and addressing climate change. Fintech and digital dollars also fall under the Vice Chair for Supervision's purview. Decisions must also be made on whether to strengthen the eased bank stress tests compared to the past. Consideration is needed on whether to reinforce the debt ratios of banks that were relaxed during the COVID-19 period.

Professors Cook and Jefferson are Black. This can also be interpreted as President Biden's effort to diversify the predominantly white Fed Board members. Only three Black individuals have served as Fed Board members in 108 years. President Biden has maintained a stance to expand racial diversity at the Fed.

WSJ expects that since the terms of current Vice Chairs Randall Quarles and Richard Clarida end at the end of this month and next month, President Biden will announce their successors in January.

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