Brainard Wins Senate Confirmation to Be Vice Chairman of the Fed | Economic news
By CHRISTOPHER RUGABER, AP Business Writer
WASHINGTON (AP) — The Senate on Tuesday confirmed the nomination of Lael Brainard to a four-year term as vice chairman of the Federal Reserve, elevating her to the Fed’s No. the central bank’s toughest fight against inflation in four decades.
His confirmation came in a 52-43 vote in the Senate, with seven Republicans and all Democrats present voting in favour. President Joe Biden had nominated Brainard in November.
The relatively close vote reflects the increasingly partisan atmosphere in Congress and nationally that is now engulfing the nominating process of the Fed, an independent institution that has sought to stay above politics. The last time Brainard, a longtime Democratic official, stood before the Senate in 2014, her nomination to the Fed Board of Governors was approved 61-31.
In another sign of division, a procedural vote on whether to consider Biden nominating economics professor Lisa Cook to a position on the Fed board was defeated on Tuesday on partisan lines. , delaying a final Senate vote on his nomination.
The delay in reviewing Cook, who, if confirmed, would become the first black woman to serve on the Fed board, has drawn angry recriminations from senators from both parties, including statements suggesting racial bias from Senate Republicans.
“Republicans on my committee have a consistent record of voting against black women,” said Sen. Sherrod Brown, the Ohio Democrat who leads the Senate Banking Committee.
Brown cited overwhelming Republican opposition to the nominations of Sandra Thompson to lead the agency that regulates mortgage giants Fannie Mae and Freddie Mac, and Biden’s nominee for Supreme Court, Ketanji Brown Jackson.
Senator Pat Toomey of Pennsylvania, the committee’s lead Republican, countered that it was “sad and shameful” to suggest “there is some sort of racial bias against black women” among Senate Republicans. Toomey noted that Republicans on the committee voted for five women of color, including Cecilia Rouse, one of Biden’s top economic advisers.
Biden and the Senate have struggled to fill three vacancies on the Fed board as the central bank grapples with the delicate challenge of raising interest rates enough to quell inflation — but not to the point of plunging the economy into recession. .
Brainard’s rise to a prominent role in policymaking follows a long career as an economics official during previous Democratic administrations. She served as an adviser to President Bill Clinton in the late 1990s before becoming the Treasury’s top international affairs official under President Barack Obama from 2009 to 2013.
Brainard, 60, the only Democrat on the board so far, has generally supported keeping interest rates low to support growth and hiring, making her a ‘dove’ in the Fed language. The “hawks”, on the other hand, generally support higher rates to control inflation.
Three other Fed nominees are also awaiting confirmation from the Fed board, including Jerome Powell for a second four-year term as Fed chair. Powell has served in a temporary position since his first term expired in early February and enjoys broad bipartisan support in the Senate.
In addition to Cook, an economics professor at Michigan State University, Biden named Philip Jefferson, an economist and academic dean at Davidson College in North Carolina. If confirmed, Jefferson would be the fourth black man on the board. Jefferson was unanimously approved last month by the Senate Banking Committee.
Cook has drawn nearly unified opposition from Senate Republicans, who argue she lacks sufficient experience in interest rate policy research. They also expressed concern that she is not dedicated to fighting inflation. In an earlier Senate procedural vote that was 50-49 in his favor, Cook needed the vote of every Democratic senator.
Brown on Tuesday sought to delay a procedural vote on Cook’s nomination because two Democrats had tested positive for COVID and were unable to vote. Republicans objected, forcing the vote to continue. The vote fell through, 47-51, meaning Senate Democrats will have to try to confirm Cook later when all of their members are healthy.
Cook, who earned a doctorate in economics from the University of California, Berkeley, served as an economist on the White House Council of Economic Advisers from 2011 to 2012. She also served as an adviser to Biden’s transition team on Fed and bank regulatory policy.
Previously, Biden tapped Sarah Bloom Raskin to be the Fed’s chief banking regulator. Raskin later withdrew from consideration after Republicans and a Democrat, Senator Joe Manchin of West Virginia, lined up against her. Biden has since appointed Michael Barr, a former Treasury Department official, to the position. Brown said Tuesday he hopes to hold a hearing on Barr as early as mid-May.
If confirmed, Cook and Jefferson are unlikely to change Fed policy in the coming months, economists say, although they will help balance the hawkish views that now dominate the board. Fed governors often defer to the president and are much less likely to cast dissenting votes at Fed meetings, unlike some regional bank presidents.
“Even the most dovish current members (of the Fed) recognize that inflation is so obviously too high, it’s a tax on households, it has to be dealt with,” said Ellen Gaske, chief economist at PGIM. Fixed Income.
Many economists believe the Fed will raise its benchmark short-term interest rate by half a percentage point at each of its next three meetings, in May, June and July, to try to rein in the acceleration price increases.
Such rate hikes would be larger than the typical quarter-point increases from the Fed and would likely result in higher borrowing costs for home loans, car loans and credit cards. These higher costs could, in turn, slow consumer spending and weaken the economy as a whole.
Brainard was the architect of a Fed policy framework, adopted in August 2020, under which it said it would no longer raise rates just because the jobless rate had fallen to a low level that could boost inflation. Instead, the Fed said it would wait for real evidence that prices are accelerating.
This framework has been blamed by some critics for contributing to the Fed’s delay in raising rates as high inflation erupted last year – a claim Powell disputes.
Brainard also said the Fed could factor climate change more directly into banking supervision, a stance that has drawn opposition from many Senate Republicans.
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