Republicans are signaling that they will help bail out Jerome Powell if he's renominated to lead the Federal Reserve amid opposition and skepticism from progressives.
The burgeoning fight over who will lead the nation’s central bank comes as Powell’s four-year term runs out in February. Fed watchers anticipate President BidenJoe BidenChina eyes military base on Africa's Atlantic coast: report Biden orders flags be flown at half-staff through Dec. 9 to honor Dole Biden heading to Kansas City to promote infrastructure package MORE could make an announcement in late October or November in order to set up an early 2022 confirmation vote for another four-year term.
Powell has strong backers, including Treasury Secretary Janet YellenJanet Louise YellenSenate leaders face pushback on tying debt fight to defense bill Treasury refrains from naming any currency manipulators US could default within weeks absent action on debt limit: analysis MORE. But he’s facing a curveball in the form of a stock trading scandal that has poured fuel on calls from progressives for Biden to shake up the culture at the Federal Reserve by changing its top leadership.
GOP senators, in part driven by concern that a Powell replacement would be more liberal, are making it clear they will help put up the voters to confirm him to a second term.
Sen. Chuck GrassleyChuck GrassleyFormer Sen. Bob Dole dies at 98 Alarm grows over smash-and-grab robberies amid holiday season GOP blocks bill to expand gun background checks after Michigan school shooting MORE (R-Iowa) said he would support Powell and that he thought there would be enough GOP votes to overcome any Democratic defectors.
“The reason I would support him — it isn’t because I agree with the way he’s handled the inflation issue,” Grassley said, “but the alternative would be much worse.”
Though nominations only require a simple majority to get confirmed by the Senate, Powell will need help from Republicans as there are likely to be Democratic defections in the evenly split chamber.
Powell will face at least one Democratic “no” vote in the Senate Banking Committee after Sen. Elizabeth WarrenElizabeth WarrenWarren calls on big banks to follow Capital One in ditching overdraft fees Crypto firm top executives to testify before Congress Massachusetts Gov. Charlie Baker won't seek reelection MORE (D-Mass.), who opposed Powell’s nomination in 2018, became the first Democratic senator to come out against him.
“Renominating you is gambling the next five years of a Republican majority on the Fed board and a Republican chair who has regularly voted to deregulate Wall Street won't drive this economy off a financial cliff again,” Warren said, referring to the 2007-08 financial crisis.
Sen. Jon TesterJonathan (Jon) TesterDemocrats wrangle to keep climate priorities in spending bill On The Money — Powell pivots as inflation rises Senators huddle on path forward for SALT deduction in spending bill MORE (D-Mont.), another Democrat on the committee, has said that he’ll support Powell, touting his ability to maintain the “independence” of the Federal Reserve. But other Democratic senators, including Banking Committee Chairman Sherrod BrownSherrod Campbell BrownSenate race in Ohio poses crucial test for Democrats Powell says Fed will consider faster taper amid surging inflation Biden faces new pressure from climate groups after Powell pick MORE (D-Ohio), haven’t tipped their hand yet on if they will support Powell.
The Banking Committee is evenly split between Republicans and Democrats, meaning Powell will need GOP votes given Warren’s opposition and could need additional help if other Democrats on the panel come out against him.
More than half of the GOP senators on the panel have said that they would support Powell, giving him a potentially comfortable margin to work with.
“I’ve disagreed with him before ... but as much as any person on God’s green earth, Jay Powell held together the world economic system after the shutdown and he had to do it with bailing wire and duct tape and spit,” said Kennedy.
Sen. Mike RoundsMike RoundsSenate leaders face pushback on tying debt fight to defense bill Overnight Defense & National Security — US tries to deter Russian invasion of Ukraine Senate eyes plan B amid defense bill standoff MORE (R-S.D.), another member of the Banking Committee, added that he thinks Powell has “done a very good job under very trying times.”
“I would be very comfortable with him having an additional term,” Rounds said.
In addition to Kennedy and Rounds, GOP Sens. Thom TillisThomas (Thom) Roland TillisGOP blocks bill to expand gun background checks after Michigan school shooting Overnight Defense & National Security — A new plan to treat Marines 'like human beings' Republicans press Milley over perceived progressive military agenda MORE (N.C.), Steve DainesSteven (Steve) David DainesBill honoring 13 service members killed in Afghanistan heads to Biden's desk The Memo: Much-criticized Trump policy puts Biden in a vise The good, bad, and ugly of Tester's Blackfoot-Clearwater Stewardship Act MORE (Mont.), Mike CrapoMichael (Mike) Dean CrapoGOP ramps up attacks on SALT deduction provision Senate GOP threatens to block defense bill Republican Senators request military aid for Taiwan amid pressure from China MORE (Idaho), Jerry MoranGerald (Jerry) MoranLawmakers remember Bob Dole: 'Bona fide American hero' Biden signs four bills aimed at helping veterans Bottom line MORE (Kan.) and Kevin CramerKevin John CramerMcConnell leaves GOP in dark on debt ceiling Advocates see pilot program to address inequalities from highways as crucial first step The Memo: Rising costs a growing threat for Biden MORE (N.D.) are each on the Banking Committee and have indicated that they would support Powell if he’s renominated.
Powell is also expected to need GOP help to get confirmed on the floor. Though Warren is the only Democratic senator, for now, that has said she will oppose Powell, he’s sparked opposition from progressives, who are urging Biden to select someone else.
Part of the headache for Powell stems from the independent actions of two presidents of Fed reserve banks and Fed Vice Chairman Richard Clarida, all of whom conducted financial trades approved by ethics officials in early 2020.
The Federal Reserve's internal watchdog will review the financial transactions amid growing backlash over how the officials managed their portfolios amid the pandemic. The Office of Inspector General, the bank’s independent ethics investigator, will determine if the moves were in line with internal ethics rules and federal law.
Warren, who had already announced she wouldn’t support Powell, doubled down on her criticism in the wake of the news, claiming that it showed Powell had “failed as a leader.”
But while the scandal has revived questions among progressives about giving Powell another term, their concerns run deeper.
Democrats have praised Powell for boosting the Fed’s focus on maximizing employment, standing up to former President TrumpDonald TrumpBiden heading to Kansas City to promote infrastructure package Trump calls Milley a 'f---ing idiot' over Afghanistan withdrawal First rally for far-right French candidate Zemmour prompts protests, violence MORE’s constant attacks and leading efforts to stabilize the market throughout the pandemic.
But the party is divided over whether Powell’s employment-driven approach to monetary policy is worth the cost of future regulatory rollbacks. Brown has urged Powell to stop deregulation until Biden names his Federal Reserve picks. He’s also earned frustration from climate hawks, including Sen. Sheldon WhitehouseSheldon WhitehouseWhat's that you smell in the Supreme Court? The Hill's Morning Report - Ins and outs: Powell renominated at Fed, Parnell drops Senate bid On The Money — Biden sticks with Powell despite pressure MORE (D-R.I.).
Progressives are eager for Biden to put his own stamp on the Federal Reserve, including replacing Powell with someone more liberal. Up to four seats on the seven-person Fed board, including Powell’s, will likely be open by February.
They’ve rallied around Fed board member Lael Brainard as an ideal successor for Powell. She’s also been floated for the vice chair position if Biden renominates Powell to lead the Federal Reserve.
It’s not just progressives. Sen. Joe ManchinJoe ManchinTrump haunts Biden vaccine mandate in courts IRS data proves Trump tax cuts benefited middle, working-class Americans most Overnight Energy & Environment — Presented by ExxonMobil — Dems press drillers over methane leaks MORE (D-W.Va.) urged Powell earlier this year to draw down economic stimulus over inflation concerns, and Sen. Bob MenendezRobert (Bob) MenendezFive ways Senate could change Biden's spending plan Spending bill faces Senate scramble Republicans raise concerns over Biden's nominee for ambassador to Germany MORE (D-N.J.), another member of the Banking Committee, has questioned Powell about diversity at the Federal Reserve.
Powell could be at risk of losing additional Democratic votes on the Senate floor. He was confirmed as chairman in 2018 in an 84-13 vote, giving him a wide margin of approval. But nine of the 13 “no” votes were from Democrats.
Sens. Richard Blumenthal (D-Conn.), Cory BookerCory BookerMaternal and child health legislation must be prioritized now Poll: Harris, Michelle Obama lead for 2024 if Biden doesn't run Five reasons for Biden, GOP to be thankful this season MORE (D-N.J.), Dianne FeinsteinDianne Emiel FeinsteinWhat's that you smell in the Supreme Court? New variant raises questions about air travel mandates Progressive groups urge Feinstein to back filibuster carve out for voting rights or resign MORE (D-Calif.), Ed MarkeyEd MarkeySenators seek to curb counterfeit toys and goods sold online Senate GOP blocks defense bill, throwing it into limbo Equilibrium/Sustainability — Presented by Southern Company — Pledged money not going to Indigenous causes MORE (D-Mass.), Jeff MerkleyJeff MerkleySenate GOP blocks defense bill, throwing it into limbo Lawmakers call on Olympic committee to press China on human rights abuses Senate Democrats call on Biden to push for COVID-19 vaccine patent waivers at WTO MORE (D-Ore.), Warren and Bernie SandersBernie SandersWTO faces renewed scrutiny amid omicron threat Overnight Health Care — Presented by March of Dimes — Abortion access for 65M women at stake Hospitals in underserved communities face huge cuts in reckless 'Build Back Better' plan MORE (I- Vt.), as well as then-Sen. Kamala HarrisKamala HarrisBiden cannot allow his domestic fumbles to transfer to the world stage Joe Manchin should embrace paid leave — now The Hill's 12:30 Report: Biden defends disappointing jobs report MORE (D-Calif.), voted against Powell in 2018.
Blumenthal has since indicated that he would support Powell if he’s nominated to a second term, but other previous Democratic "no" votes haven’t yet tipped their hand.
Powell could get confirmed to a second term despite opposition from some progressives as long as there is enough GOP support to keep him above 50 votes and Harris, now vice president, breaks a tie in his favor.
Some top Republicans are keeping their powder dry, citing concerns over inflation.
Asked if he could support Powell, Sen. John ThuneJohn Randolph ThuneThe Hill's Morning Report - Presented by Facebook - Congress avoids shutdown Senate dodges initial December crisis with last-minute deal Congress averts shutdown after vaccine mandate fight MORE (S.D.), the No. 2 Senate Republican, said he would “consider it” if Powell is renominated.
“I’m really worried about the Fed’s views on inflation particularly early on. They were really discounting it. So I’d want to think about it and maybe ask him some questions,” he said. “I know in one interaction I had with him when I asked about that they really downplayed it, and I think it’s a much more serious issue.”
Sen. Pat ToomeyPatrick (Pat) Joseph ToomeyBlack women look to build upon gains in coming elections Watch live: GOP senators present new infrastructure proposal Sasse rebuked by Nebraska Republican Party over impeachment vote MORE (Pa.), the top Republican on the Banking Committee, and Sen. Richard ShelbyRichard Craig ShelbySenate leaders face pushback on tying debt fight to defense bill Congress averts shutdown after vaccine mandate fight Pelosi hammers 'anti-science, anti-vaccination' Republicans for threatening shutdown MORE (Ala.), the second-ranking Republican on the panel, haven’t said if they would support Powell.
“I supported him before. ... Wait and see if he’s nominated and go from there. We could do a lot worse,” Shelby said. “The inflation bothers me, and what he says about inflation bothers me.”
But Shelby added that there were some alternatives to Powell being “floated around” that would “scare a lot of people.”
Sylvan Lane contributed.