Biden Backs Jerome Powell For Fed Chairman

It’s official: the money printer will continue to go “Brrrr.” 

Today, Biden announced that he’s renominating Jerome Powell as Federal Reserve Chairman. There was some uncertainty in the market about the possibility of a change in seat after Biden met privately with both Powell and Lael Brainard on separate occasions earlier this month. Brainard still received the nomination for Vice Chairman, though both of these nominations are pending senate approval. 

Massachusetts Senator Elizabeth Warren, one of the most progressive democratic senators, has been open about her preference for Brainard to receive the nomination over Powell. Recently, Warren went as far as calling Jerome Powell “a dangerous man”. Powell, a Republican who served as Fed Chairman since 2018, has come under fire from Warren for “regularly voting to deregulate Wall Street.” 

Not everyone would agree with her assertion, however. When asked, Dallas Fed President Richard Fisher said, “This is a good decision. While Lael Brainard is a capable economist, appointing her under pressure from progressive Senators like Elizabeth Warren could have sent a signal that the Fed has been overtly politicized, irreparably damaging its reputation for independence.” 

Powell also faced scrutiny earlier in the year for a trading scandal that involved several sitting Fed presidents. That scandal, driven by documents indicating that several members of the Fed committee had traded while making policy decisions, resulted in the early retirements of Fed Presidents Robert Kaplan and Eric Rosengren, as well as an overhaul of the Fed’s ethics practices with regard to trading and owning equities.

Despite the scandal and opposition from some of the more progressive senators, it’s highly likely that the renomination will be confirmed by the senate — the majority of senators polled approve of the job Powell has done throughout the pandemic thus far. Powell’s pandemic policies, most notably quantitative easing and the levering of rates, have powered the US economy over the past 20 months. 

As the economy recovers from symptoms of the pandemic, it seems many believe it’s best that the man who brought us to the dance takes us home. Markets initially opened higher following the renomination, with the S&P 500, Nasdaq, Dow Jones and the Russell 2000 all beginning the day with modest gains. Those gains, however, have begun to fade throughout the afternoon, with the 10-year yield breaching 1.60%, up 4% on the day.