‘Dangerous man’: Elizabeth Warren opposes Jerome Powell getting second term as Fed chair

Senator Elizabeth Warren, pressing Federal Reserve Chair Jerome Powell on his record on financial regulation, said she wouldn’t support him for a second term as head of the US central bank.

“Your record gives me grave concern,” the Massachusetts Democrat said on Tuesday (US time) during a Senate Banking Committee hearing. “You have acted to make our banking system less safe, and that makes you a dangerous man to head up the Fed and that is why I will oppose your renomination.”

Senator Elizabeth Warren speaks with US Fed chief Jerome Powell during a Senate Banking, Housing and Urban Affairs Committee hearing in Washington.Credit: Getty Images

Powell’s term expires in February and Bloomberg News has reported that White House aides are considering recommending President Joe Biden keep him on the job.

Treasury Secretary Janet Yellen, who testified beside Powell at the hearing, told senior White House advisers in August that she supports reappointing Powell as chair. Her support is a key voice in the White House deliberation process, Bloomberg has reported, given her prior experience as Fed chair and at the central bank.

Bipartisan support

Even if Warren was a no vote on Powell, he could probably still count on bipartisan support for confirmation. A number of senators in both parties have said they would back him, including Republicans Rob Portman of Ohio, Thom Tillis of North Carolina, Mike Rounds of South Dakota, Jerry Moran of Kansas and Steve Daines of Montana.

Powell’s votes that joined Vice Chair of Supervision Randal Quarles’ policies of lightening regulation in the name of efficiency has been a sticking point for both Warren and Sherrod Brown, Democratic senator for Ohio and chair of the Senate banking panel.

Warren’s the only senator to come out against a Powell pick. Brown has yet to endorse him, but made a push for a more diverse Federal Reserve during the Tuesday hearing.

Fed Governor Lael Brainard is seen as another leading contender for the chair seat. She and Powell have diverged in their views on financial regulation in particular.

“You have acted to make our banking system less safe, and that makes you a dangerous man to head up the Fed and that is why I will oppose your renomination.”

Elizabeth Warren

Warren’s opposition complicates the Biden administration’s calculus. It will either need to increase its push for Powell or pick another candidate, who may face more resistance from Republicans in the confirmation process in a Senate in which Democrats hold 50 of 100 seats.

A White House official did not offer an immediate comment.

Powell, a Republican, was nominated to the Fed Board by former President Barack Obama and elevated to chair by former President Donald Trump.

Powell flexibility

Warren’s declaration against him signals she doesn’t believe that a new vice chair of supervision can set the agenda with a chair who may not agree with him or her. Powell has shown flexibility in the past, at least resisting dissenting in Board votes against initiatives by Daniel Tarullo, who led an aggressive overhaul of supervision in the wake of the 2008-2009 financial crisis.

Lael Brainard is seen as a leading contender to possibly replace Jerome Powell. Credit: Bloomberg

Powell interprets the Dodd-Frank Act — the 2010 reforms put in place to strengthen banks after the crisis — in rather strict statutory terms. The law says that the vice chair of supervision “shall develop policy recommendations” for the Fed Board and shall “oversee the supervision and regulation of such firms.”

The chair seat is just one of four positions the Biden administration could fill. Vice Chair Richard Clarida’s term as a governor expires in January, and Randal Quarles term as vice chair of supervision expires next month. In addition, there is a vacant seat.

The appointments could have a dramatic impact on expectations of policy next year. What’s more, Robert Kaplan and Eric Rosengren, presidents of the Dallas and Boston Fed banks, have resigned in the wake of scrutiny over their stock trading in 2020, possibly throwing two new forecasts into the equation when Fed officials meet in December.

Bloomberg

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