Progressives led by AOC are urging Biden to appoint a new Federal Reserve Chair with a focus on regulation and global climate change. (iStock)
Rep. Alexandria Ocasio-Cortez (D-N.Y.) led a group of progressive Democrats Tuesday in requesting that President Joe Biden replace Federal Reserve Chair Jerome Powell due to his lack of focus on regulations and climate change.
Powell, appointed by President Donald Trump in February 2018, is coming up on the end of his term in February 2022. Biden will soon need to decide if he plans to re-appoint Powell or choose someone new for the economic post. Reps. Rashida Tlaib (D-Mich.), Ayanna Pressley (D-Ohio.), Mondaire Jones (D-N.Y.) and Jesús García (D-Ill) also joined Rep. Ocasio-Cortez in releasing Tuesday's statement.
"As news of the possible reappointment of Federal Reserve Chair Jerome Powell circulates, we urge President Biden to re-imagine a Federal Reserve focused on eliminating climate risk and advancing racial and economic justice," they stated. "This consequential appointment has the potential to remake the composition of the Board of Governors."
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Progressives acknowledge Powell’s accomplishments but call for new leadership
"While the Federal Reserve has made positive changes to its approach to full employment reflected in the new monetary policy framework, our concerns with Chair Powell’s track record are two-fold," the statement said. The first concern was not economic related.
"Under his leadership, the Federal Reserve has taken very little action to mitigate the risk climate change poses to our financial system," the statement continued. "To illustrate, the Federal Reserve received a D- rating for its approach to climate risk policies from Positive Money’s Global Central Bank Scorecard, placing it at the bottom of the G20 Central Banks. At a time when the Intergovernmental Panel on Climate Change is warning of the potential catastrophic and irreversible damage inflicted by a changing climate, we need a leader at the helm that will take bold and decisive action to eliminate climate risk."
The second concern Rep. Ocasio-Cortez had with Powell is what she sees as a lack of focus on regulations.
"Secondly, under Chair Powell the Federal Reserve has substantially weakened many of the reforms enacted in the wake of the Great Recession regulating the largest banks, including capital and liquidity requirements, stress tests, the Volcker Rule and living will requirements," the statement said. "During the 2008-financial crisis, millions of Americans lost their homes and jobs, and many have failed to fully recover. Weakening financial regulations that were specifically created to prevent such a disaster from happening again, risked the livelihoods of Americans across the country. 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. We urge the Biden administration to use this opportunity to appoint a new Federal Reserve chair."
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Powell receives support for reelection
Despite this criticism, Powell has had received from many at high levels. For example, U.S. Treasury Secretary and former Federal Reserve Chair Janet Yellen told senior White House advisors that she supports reappointing Powell to a second term as chair.
Yellen holds nearly two decades of experience at the Fed, and her backing of Powell could hold significant weight.
People familiar with the matter say Biden is likely to make his final decision near Labor Day.
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