President Trump announced Thursday that he will nominate Federal Reserve Governor Jerome Powell to be chairman of the central bank.
Powell, a Republican appointed to the Fed by President Obama in 2012, served as a Treasury Department undersecretary during the George W. Bush administration.
If confirmed, Powell will replace Fed Chairwoman Janet Yellen, whose term leading the bank ends in February.
Trump praised Powell, known as Jay, for being able to lead the Fed with “sound monetary policy and prudent oversight of the financial system.”
“Jay has earned the respect and admiration of his colleagues for his hard work, expertise and sound judgment,” Trump said during Thursday's announcement in the White House Rose Garden.
“He’s strong, he’s committed, he’s smart,” Trump said, calling Powell a “consensus builder.”
Powell said he was “honored” and “humbled” to be nominated to lead the Fed, and praised his potential predecessors Yellen and former Fed Chairman Ben Bernanke for leading the U.S. economy through the financial crisis.
The Trump nominee praised his Fed colleagues for gearing the American economy near full employment and implementing rules that made the U.S. financial system “far stronger and more resilient than it was before the crisis.”
Trump also lauded Yellen, who he had considered renominating, calling her “a wonderful woman who’s done a terrific job” and an “absolutely a spectacular person.”
Powell had been considered Trump’s favorite to replace Yellen for roughly a month. Multiple outlets had reported Trump’s preference for Powell, who’s seen as a slight step to the right of Yellen.
Yellen and Powell have both supported a slow, steady increase in interest rates toward historic averages. The two were among several Obama Fed appointees who argued that increasing interest rates too quickly could stifle the recovery from the 2008 recession.
Powell has also called for moderate fixes to the Dodd-Frank Act that have wide bipartisan support among regulators, including Yellen. A former lawyer and investment banker, Powell had overseen the Fed’s financial regulatory efforts until the confirmation of Randal Quarles as the bank’s vice chairman of supervision.
Powell was confirmed for the Fed by a Democratic-controlled Senate after first being nominated by Obama. He was opposed in 2012 by 20 Republicans, including GOP leaders such as Sens. John CornynJohn CornynAbbott bows to Trump pressure on Texas election audit Senate panel advances antitrust bill that eyes Google, Facebook Democrats up ante in risky debt ceiling fight MORE (Texas) and John ThuneJohn Randolph ThuneSchumer sets Monday showdown on debt ceiling-government funding bill Congress facing shutdown, debt crisis with no plan B GOP warns McConnell won't blink on debt cliff MORE (S.D.).
The leaders of the Senate Banking Committee were divided over Powell's nomination for Fed chairman in statements issued after the announcement Thursday.
Chairman Mike CrapoMichael (Mike) Dean CrapoThe Hill's Morning Report - Presented by Alibaba - Biden jumps into frenzied Dem spending talks GOP senators say Biden COVID-19 strategy has 'exacerbated vaccine hesitancy' The Energy Sector Innovation Credit Act is an industry game-changer MORE (R-Idaho) praised Trump for his decision and said he looked forward to discussing with Powell "how we can strike the proper balance between the need for a safe and sound financial system and the need to promote a vibrant, growing economy.”
Sen. Sherrod BrownSherrod Campbell BrownSenate poised to battle over Biden's pick of big bank critic Biden taps big bank skeptic to for top regulatory post Schumer announces Senate-House deal on tax 'framework' for .5T package MORE (Ohio), the Banking panel's ranking Democrat, said he was "disappointed" that Yellen wasn't renominated and said he is eager to hear from Powell on his financial regulatory agenda.
"Given the Fed’s role in implementing the post-crisis rules for Wall Street, I hope Mr. Powell won’t have the same amnesia that plagues the rest of the Administration," Brown said. "Many Ohioans are still paying the price for the financial recklessness that the Fed ignored a decade ago.”
Some Republicans eager to break from Yellen's policies urged Trump to nominate Stanford University economist John Taylor, a staunch conservative who would likely call for quicker rate hikes and substantial changes to Dodd-Frank.
Taylor was one of Trump’s final three candidates, but Treasury Secretary Steven MnuchinSteven MnuchinThe Hill's Morning Report - Presented by Alibaba - Biden jumps into frenzied Dem spending talks Former Treasury secretaries tried to resolve debt limit impasse in talks with McConnell, Yellen: report Menendez, Rubio ask Yellen to probe meatpacker JBS MORE reportedly threw his weight behind Powell. Mnuchin and Powell have reportedly grown close working together on regulatory reform, and Mnuchin believed Powell is a safer bet than Taylor to effectively handle a financial crisis.
One of Powell’s most pressing first decisions will be whether to ask Yellen to stay on the Fed board. While Yellen’s term as Fed chairwoman ends in February, her 14-year term on the board doesn’t expire until January 2024.
Fed chairmen who aren’t renominated by the president typically leave the bank after their chairmanship ends. Keeping Yellen on the Fed board would give Powell another moderate ally and would likely reassure markets about the future of the central bank. The U.S. economy has remained relatively strong under Yellen’s leadership, as unemployment lingers below the Fed’s 5 percent target and the stock market soars.
But Yellen’s departure would open another spot on the Fed for Trump to fill, and Powell could be pressured by administration officials to allow the president to leave a bigger mark on the bank.
Yellen congratulated Powell in a statement, promising a "smooth transition."
"Jay's long and distinguished career has been marked by dedicated public service and seriousness of purpose," Yellen said. "I am confident in his deep commitment to carrying out the vital public mission of the Federal Reserve."
--Updated at 3:38 p.m.