A think tank highly critical of Federal Reserve chair Jerome Powell’s record on banking regulation released an assessment of his four-year tenure on Monday that is by turns scathing and complementary, highlighting the competing considerations as U.S. President Joe Biden weighs whether to reappoint him.
The 23,000-word report from Better Markets, released ahead of the Fed’s annual Jackson Hole central banking conference, now being held virtually, highlights Mr. Powell’s “very poor” record on banking regulation and his “inexplicably slow” response to climate-related risks.
It also praises his “exemplary” handling of former president Donald Trump’s attacks on the U.S. central bank’s independence, and takes note of his quick and aggressive action to shelter the economy from the impact of the coronavirus pandemic and the benefits of the Fed’s new focus under Mr. Powell on boosting the labour market.
Entitled “Should Federal Reserve Chairman Jay Powell be Reappointed,” it never answers its own question. Dennis Kelleher, who runs what The New York Times once called “Occupy Wall Street’s suit-wearing cousin,” says that’s on purpose.
Mr. Kelleher, who was a member of the transition team for then-president-elect Mr. Biden and vice-president-elect Kamala Harris, said the aim is “to push for a very robust process that is substantive, comprehensive and thorough.” Mr. Biden will need to make a decision one way or the other in coming months, as Mr. Powell’s term is up in February.
Progressive voices calling on Mr. Biden to replace Mr. Powell typically focus on what they view as an unwarranted easing of banking-sector regulation under the Fed chief’s watch, a view that Mr. Kelleher shares, and what they see as a less-than-pro-active approach to climate change compared with other global central banks.
But they also blame the Fed for exacerbating wealth inequality by boosting the value of assets such as stocks. On that score, the Kelleher report is decidedly less critical, noting that the Fed’s pledge under Mr. Powell not to tighten monetary policy until the economy reaches maximum employment should in the long run help close the wealth gap.
With no clear timetable from the Biden team on an announcement about the top Fed job, Mr. Powell’s backers and critics have begun to fill the void and make their preferences public. Republican Senator Steve Daines of Montana last week became the first member of the panel that will review the appointment to call for Mr. Powell’s reappointment.
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