By Jake Johnson / Common Dreams
Sen. Elizabeth Warren of Massachusetts said Tuesday that Federal Reserve Chair Jerome Powell’s record of weakening post-2008 Wall Street regulations makes him “a dangerous man” to lead the U.S. central bank—and should disqualify him from serving a second term.
“Renominating you means gambling that for the next five years, a Republican majority at the Federal Reserve with a Republican chair who has regularly voted to deregulate Wall Street won’t drive this economy over a financial cliff again,” Warren said during a Senate Banking Committee hearing. “With so many qualified candidates for this job, I just don’t think that’s a risk worth taking.”
Warren voiced disagreement with those who have downplayed Powell’s record on financial regulation, arguing that the Trump appointee’s “deregulatory actions” have put “taxpayers at risk for hundreds of billions of dollars.”
“So far you’ve been lucky,” said Warren. “The 2008 crash shows what happens when the luck runs out. The seeds of the 2008 crash were planted years in advance by major regulators like the Federal Reserve that refused to rein in big banks… Your record gives me grave concern. Over and over, you have acted to make our banking system less safe.”
Warren is not the only congressional Democrat warning President Joe Biden not to renominate Powell, whose term expires in February 2022.
Last month, as Common Dreams reported, Reps. Ayanna Pressley (D-Mass.), Mondaire Jones (D-N.Y.), Jesús “Chuy” García (D-Ill.), Alexandria Ocasio-Cortez (D-N.Y.), and Rashida Tlaib (D-Mich.) wrote a letter urging Biden to replace Powell. Unlike Warren, the House Democrats focused primarily on Powell’s climate record, which they characterized as badly inadequate.
“Under [Powell’s] leadership, the Federal Reserve has taken very little action to mitigate the risk climate change poses to our financial system,” the lawmakers wrote. “At a time when the Intergovernmental Panel on Climate Change is warning of the potential catastrophic and irreversible damage inflicted by a changing climate, we need a leader at the helm that will take bold and decisive action to eliminate climate risk.”
Some progressives, such as economist Dean Baker, have argued in favor of Powell’s renomination, pointing to his focus on keeping interest rates down and achieving full employment.
But Powell’s critics argue that there are other viable Fed candidates who similarly value full employment while also taking seriously financial regulation and the climate crisis, including Michigan State University professor Lisa Cook and attorney Sarah Bloom Raskin.
“It’s important for Biden to not settle for Powell merely because he’s been strong on monetary policy in the last few years,” the Revolving Door Project’s Max Moran wrote in a blog post in July. “Biden can choose someone more deeply devoted to full employment, and who doesn’t push him into a false choice between being strong on monetary policy and strong on regulatory policy.”
“The president can have his cake and eat it too here, so he should,” Moran added. “Because if he doesn’t, it’s average people who will suffer the most.”