President Biden Has Been Handed A Rare Opportunity: Remaking The Federal Reserve

 

     Created by the Federal Reserve Act in 1913, the Federal Reserve is America's central bank. It maximizes employment, stabilizes prices, and moderates long-term interest rates. With the Great Depression and numerous other financial disasters in the past century, its importance in America's economy has continued to grow. The Senate is tasked with confirming presidential appointees to this critical institution's Board of Governors. We've talked a lot about undoing Trump's damage to the federal judiciary, U.S.P.S. Board of Governors, and countless other federal agencies, but Donald Trump also had a greater opportunity than most to shape the Federal Reserve: he promoted Jerome Powell to chair it and appointed four more members of the seven-member board. There are currently five Republicans and one Democrat. 

     Now, President Biden needs to get to work reshaping the Federal Reserve Board of Governors. On February 5th, 2022, Powell's term as chair expires, giving Biden an opportunity to elevate a current member to chair it; the only option I see is Lael Brainard, the sole Democrat on the board who has been serving since 2014. Richard Clarida is the vice chair; his term expires in 2022 as both the vice chair and as a member of the board. Randy Quarles was appointed in 2018, but he announced that he will step down from the board at the end of 2021. Meanwhile, there is a seventh board position that is unfilled. All told, President Biden will have a chance to appoint three members and elevate said members to the positions of chair and vice chair within the next year. Doing so would flip the leaning of the Federal Reserve Board of Governors to a 4-3 Democratic majority and give Democrats both leadership positions.

     As America continues to recover from the pandemic, nearly 6 million jobs have been created, wages are up, unemployment is down to pre-pandemic levels, consumer spending on good and services are back to normal and nearly normal respectively. However, supply chain issues and inflation are two big bumps in the road that America has to overcome to make a full comeback: the former is being actively addressed by President Biden and by Congress. The latter, however, requires a cooperative Federal Reserve, and remaking this body should be one of the president's top economic priorities. These members serve 14-year terms per the Banking Act of 1935; a lot can be done in 14 years.

     Another note: Donald Trump packed the body with white men. I urge President Biden to continue his trend of appointing diverse groups to federal agencies when he considers nominees for the Federal Reserve.