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 BidenNorth Korea conducts potential 6th missile test in a month Clyburn predicts Supreme Court contender J. Michelle Childs would get GOP votes Overnight Defense & National Security — US delivers written response to Russia 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 YellenYellen says Biden's COVID-19 relief bill 'acted like a vaccine for the American economy' On the Money — Yellen highlights wealth gap in MLK speech Yellen: US has 'much more work' to close racial wealth gap 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.
“Most of the people I’ve talked to on the Republican side support his renomination. I can’t think of one person who opposes him,” said Sen. John KennedyJohn Neely KennedyLouisiana Democrat running for US Senate smokes marijuana in campaign ad MORE (R-La.).
Sen. Chuck GrassleyChuck GrassleySenate Republicans press federal authorities for information on Texas synagogue hostage-taker Small ranchers say Biden letting them get squeezed These Senate seats are up for election in 2022 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 WarrenOver 80 lawmakers urge Biden to release memo outlining his authority on student debt cancellation Kelly pushes back on Arizona Democrats' move to censure Sinema Fiscal conservatives should support postal reform 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) TesterFiscal spending deadline nears while lawmakers face pressure to strike deal Conservative group rolls out .5 million ad buy pressuring Manchin, Tester to oppose Build Back Better The Hill's 12:30 Report - Presented by Facebook - Biden's public moment of frustration 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 Democrats urge Biden to get beefed-up child tax credit into spending deal N95 distribution plan could imperil small US mask makers Biden's year two won't be about bipartisanship 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 RoundsBudowsky: President Biden leads NATO against Russian aggression Small ranchers say Biden letting them get squeezed Lawmakers press Biden admin to send more military aid to Ukraine 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 TillisSenate Republicans press federal authorities for information on Texas synagogue hostage-taker Bipartisan Senate group discusses changes to election law There is a bipartisan path forward on election and voter protections MORE (N.C.), Steve DainesSteven (Steve) David DainesHillicon Valley: Amazon's Alabama union fight — take two Senate Judiciary Committee to debate key antitrust bill Overnight Defense & National Security — No punishments in botched Kabul drone strike MORE (Mont.), Mike CrapoMichael (Mike) Dean CrapoThese Senate seats are up for election in 2022 Alabama GOP gears up for fierce Senate primary clash Senate Republicans call on Biden to lift vaccine mandate for truckers crossing Canadian border MORE (Idaho), Jerry MoranGerald (Jerry) MoranThese Senate seats are up for election in 2022 Overnight Energy & Environment — Starting from 'scratch' on climate, spending bill Eight senators ask Biden to reverse course on Trump-era solar tariffs MORE (Kan.) and Kevin CramerKevin John CramerDemocrats face scaled-back agenda after setbacks Wicker: Biden comments on Ukraine caused 'distress' for both parties Biden huddles with group of senators on Ukraine-Russia tensions 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 TrumpNorth Korea conducts potential 6th missile test in a month Kemp leading Perdue in Georgia gubernatorial primary: poll US ranked 27th least corrupt country in the world 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 WhitehouseOvernight Energy & Environment — Starting from 'scratch' on climate, spending bill Oath Keeper charges renew attention on Trump orbit Democrats call on Biden administration to ease entry to US for at-risk Afghans 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 ManchinOn The Money — No SALT, and maybe no deal The names to know as Biden mulls Breyer's replacement Poll: Sinema approval higher among Arizona Republicans than Democrats MORE (D-W.Va.) urged Powell earlier this year to draw down economic stimulus over inflation concerns, and Sen. Bob MenendezRobert (Bob) MenendezMenendez goes after Sanders over SALT comments Senators huddle on Russia sanctions as tensions escalate Schumer requests Senate briefing on Ukraine amid Russia tensions 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 BookerSenate Democrats urge Biden to get beefed-up child tax credit into spending deal Despite Senate setbacks, the fight for voting rights is far from over Small ranchers say Biden letting them get squeezed MORE (D-N.J.), Dianne FeinsteinDianne Emiel FeinsteinOvernight Energy & Environment — Starting from 'scratch' on climate, spending bill Senate panel advances bill blocking tech giants from favoring own products Eight senators ask Biden to reverse course on Trump-era solar tariffs MORE (D-Calif.), Ed MarkeyEd MarkeyBiden comments add momentum to spending bill's climate measures Overnight Energy & Environment — Starting from 'scratch' on climate, spending bill Overnight Health Care — White House boosts mask availability MORE (D-Mass.), Jeff MerkleyJeff MerkleyDemocrats say change to filibuster just a matter of time Democrats call on Biden administration to ease entry to US for at-risk Afghans Manchin, Sinema join GOP to sink filibuster change for voting bill MORE (D-Ore.), Warren and Bernie SandersBernie SandersOn The Money — No SALT, and maybe no deal Menendez goes after Sanders over SALT comments It's time for the Senate to vote: Americans have a right to know where their senators stand MORE (I- Vt.), as well as then-Sen. Kamala HarrisKamala HarrisClyburn predicts Supreme Court contender J. Michelle Childs would get GOP votes Hispanics sour on Biden and Democrats' agenda as midterms loom Officer who directed rioters away from senators says Jan. 6 could have been a 'bloodbath' 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 ThuneThere is a bipartisan path forward on election and voter protections Juan Williams: It's Trump vs. McConnell for the GOP's future Biden's year two won't be about bipartisanship 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 ToomeyConservatives are outraged that Sarah Bloom Raskin actually believes in capitalism Meet Washington's most ineffective senator: Joe Manchin Black women look to build upon gains in coming elections MORE (Pa.), the top Republican on the Banking Committee, and Sen. Richard ShelbyRichard Craig ShelbyOn The Money — No SALT, and maybe no deal Fiscal spending deadline nears while lawmakers face pressure to strike deal These Senate seats are up for election in 2022 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.