- Progressives including Alexandria Ocasio-Cortez urged Pres. Biden on Tuesday to replace Jerome Powell as Fed Chair.
- Powell made “positive changes,” but hasn’t done enough to combat climate change and racial inequity, they said.
- Still, Powell holds broad support from lawmakers and will likely win a second term by February.
- See more stories on Insider’s business page.
A group of progressive House Democrats is pressing President Joe Biden to oust Federal Reserve Chair Jerome Powell for a more climate-friendly, equality-focused central banker.
Reps. Alexandria Ocasio-Cortez, Rashida Tlaib, Ayanna Pressley, Mondaire Jones, and Chuy Garcia urged Biden to “reimagine a Federal Reserve focused on eliminating climate risk and advancing racial and economic justice” in a Tuesday statement. And while Powell helped the Fed make “positive changes” during his nearly four-year tenure, replacing him is key to a more effective central bank, the group added.
“To move forward with a whole of government approach that eliminates climate risk while making our financial system safer, we need a Chair who is committed to these objectives,” the lawmakers said.
The progressives also pushed back against Powell’s stance on bank regulation. The Fed chair “substantially weakened” several of the reforms born out of the financial crisis, even while millions of Americans are still rebounding from the Great Recession, the lawmakers said. Weakening the regulations made to avoid another 2008-like meltdown risks Americans’ livelihoods, they added.
Powell’s term is set to end in February, and the Biden administration is currently mulling whether to keep him in the position. Treasury Secretary Janet Yellen – a former Fed chair herself – has told White House advisers she wants to see Powell stay at the central bank. And Biden advisers are leaning toward recommending a second term for Powell, according to Bloomberg.
To be sure, none of the representatives who penned the statement have a vote on Powell’s potential 2022 confirmation. But a few Democratic senators have raised similar concerns with the Fed chair in recent weeks. Senate Banking Chair Sherrod Brown and Sen. Elizabeth Warren knocked Powell in July over his stance on bank regulation, arguing the chair should more rigorously watch over Wall Street. And Sen. Sheldon Whitehouse criticized Powell last week for his “middle ground” stance on climate change.
It’s not just lawmakers hitting back at Powell’s record. A collection of 22 economic, labor, and racial justice organizations wrote to Biden on Monday urging him to consider a Fed chair who better prioritizes climate change, full employment, and fighting systemic racism.
That’s not to say the Fed has been completely silent on the aforementioned issues. Central bank officials have increasingly looked into how the climate crisis endangers the financial sector and the broader economy. And the Fed’s latest framework – rolled out in August 2020 – seeks to create a more inclusive and equitable labor market, even if it involves letting inflation temporarily run hot.
For now, those calling for Powell’s replacement are likely in the minority. The Fed chair has largely enjoyed bipartisan support over his tenure, particularly for his actions during the COVID-19 recession. Powell oversaw the Fed’s March 2020 interest rate cuts and creation of emergency lending programs. His careful communication throughout the pandemic also helped stave off volatility in the financial markets.
Powell is still the most likely pick for Biden’s Fed appointment. But as the deadline for a decision nears, calls for a more progressive central banker are only getting louder.