An announcement is expected as early as next week. Biden has waited longer in making his selection than his two immediate predecessors, leaving a relatively narrow window for the Senate to confirm his choice before Powell’s term expires next February.
Biden, during a November 2 news conference, said he planned to make an announcement about his selection “fairly quickly” and said there would be “plenty of time” to move his pick through the confirmation process.
“I’ve given a lot of thought to it, and I’ve been meeting with my economic advisers on what the best choices are, and we’ve got a lot of good choices,” Biden said when asked about the position. “But I’m not going to speculate now.”
The decision marks a critical moment for a White House in the midst of managing an economy emerging in fits and starts from a once-in-a-century pandemic. While job and wage growth have been robust, a combination of pandemic-driven supply chain bottlenecks and a demand-surge for goods have led to price increases that this week reached a three decade high.
Post-pandemic crosswinds make Biden’s choice of the nation’s most important economic policymaker unusually complex. Powell is a Republican-appointed chairman, having been picked by President Donald Trump four years ago.
Leading members of the Democratic Party, which narrowly controls Congress, want the President to replace Powell with current Fed governor Lael Brainard in the belief that she would advance more aggressive regulation of financial institutions.
Sen. Elizabeth Warren, a leading progressive voice with ties to key economic advisers across the administration, leveled a fierce broadside against Powell in September when she called him a “dangerous man to head up the Fed” given her view of his posture on regulatory matters.
Disclosures that multiple Fed officials bought and sold stocks at the height of the pandemic — as the Fed was deploying extensive emergency measures to forestall a market collapse — have fueled progressive efforts to push for a change atop the central bank. Two regional bank presidents departed the Fed in the wake of the disclosures.
The Fed in October announced a sweeping ban on top officials owning individual stocks and bonds, as well as other trading restrictions. The stock trading revelations have not been viewed as a problem for Powell during the current process, according to people familiar with the matter.
Powell has also faced criticism from some lawmakers in both parties for continuing to back an expansive monetary policy even as inflation spikes amid the bumpy recovery from coronavirus shutdowns.
But to this point, neither Warren’s strident opposition nor other concerns about Powell’s approach have generated any broad-based public opposition on Capitol Hill. The White House has kept key Democratic senators in the loop throughout the process, though they have not tipped Biden’s hand, people familiar with the matter said.
At a time of heightened uncertainty over inflation and growth alike, Powell has overall received strong reviews for handling extraordinary economic turbulence since early last year. And his commitment to using monetary policy levers to help repair the labor market matches the view of White House economists.
“Powell is steering this ship through very rocky waters and he seems very determined to get us to the other side where there is maximum employment,” said Betsey Stevenson, a University of Michigan economist who advised former President Barack Obama. “I’m really worried about what happens if he gets asked to hand over the wheel right now. “
“He deserves it,” added Tony Fratto, a former Treasury Department official who worked in President George W. Bush’s administration. “He’s been an anchor … in the face of truly unprecedented challenges.”
In addition, the 84 Senate votes Powell received for confirmation as chairman in January 2018, along with the public support from several Republican senators for his selection this time around, suggest he could win a second term without much difficulty, which might not be true of Brainard. Obama originally appointed Powell to the Fed’s board of governors in 2011.
A vacancy for the position of Fed Vice Chair of Supervision gives Biden the opportunity to respond to Democratic concerns about Powell’s approach to financial regulation without replacing him as chair. Some economists close to the administration have speculated that he could select Brainard for that post.
Biden has known Brainard, who served in the Obama Treasury Department when he was vice president, for years. He interviewed both her and Powell at the White House last week.
If he nominates Powell for a second term, Biden would become the third consecutive Democratic president to keep a Republican in the Fed chairmanship. Bill Clinton renominated Alan Greenspan in the job in 1996, as Obama did with Ben Bernanke in 2009.
Biden’s predecessor, Donald Trump, broke what had become an unofficial precedent when he chose not to re-nominate Janet Yellen, Obama’s second-term selection for the role.
Powell replaced Yellen and went on to become a regular punching bag for Trump as the former President sought to influence the Fed’s interest rate policy.
Yellen is now Biden’s Treasury secretary and privately communicated to White House advisers this fall about the value of continuity at the central bank, which was viewed internally as a tacit endorsement for the job, according to people familiar with the matter.
Publicly, Yellen has only acknowledged that she’s spoken to Biden about the Fed selection and not given an explicit endorsement. But she did offer praise for Powell’s time in the role.
“I think that Chair Powell has certainly done a good job,” Yellen said in a November 1 CNBC interview.