Joe Biden wanted to bring diversity among the governors of the powerful American central bank (Fed), but the three economists he chose – and who have yet to be confirmed by the Senate – are now the victims of a political battle .
Elected Republicans, but also the American Chamber of Commerce, castigate the choices of the Democratic President, who according to them threaten the sacrosanct independence of the Fed, at a time when it must fight against inflation.
The White House took advantage of having three vacant seats to fill out of the seven on the Federal Reserve Board of Governors to bring in, as promised, a little diversity.
The most talked about nomination is that of Lisa Cook, a professor at Michigan State University and former economic adviser to Barack Obama, who would become the first African-American woman governor of the Fed.
Philip Jefferson, professor and administrator of Davidson College in North Carolina, would become the fourth black man to serve since the establishment of the institution in 1913.
And for the key post of vice-president in charge of banking supervision, Joe Biden chose Democrat Sarah Bloom Raskin, former number two in the Treasury – the equivalent of the Ministry of Economy and Finance – under the Obama administration.
His positions on banking regulation and climate change concentrate most of the criticism. Added to this is the fact that she is the wife of a Democrat elected to the House of Representatives.
The Senate banking committee must hear these personalities jointly on Thursday, before voting. If all are confirmed by the Senate, the majority of Fed board members would be women, for the first time in history, and most governors appointed by a Democratic president.
“Diversity”
For the White House, these new governors will bring “long-awaited diversity to the head of the Federal Reserve”.
Republican Senator Pat Toomey, one of the officials of the banking commission, assures him that the “diversity” is not there, because none of these candidates comes from the energy sector.
Like the American Chamber of Commerce, he criticizes Sarah Bloom Raskin in particular for being too aggressive in focusing on the role of banks in the fight against climate change.
Conservative commentator George Will has accused the Fed of being politicized, even writing in a column that “(Lisa) Cook’s peer-reviewed academic writing relevant to monetary policy is, to be polite, thin.”
But economists and Fed watchers say the criticisms are unfounded, and in some cases even motivated by skin color.
“I just don’t understand,” Diane Swonk, chief economist at Grant Thornton, told AFP. “It seems really biased.”
She judges that Lisa Cook is an “extraordinary” candidate, and that the personalities chosen by Joe Biden “bring enormous depth to the Fed”, at a time when it “finally recognizes inequalities and what they cost us”.
Lisa Cook and Philip Jefferson have both worked on issues of labor market inequality, a topic repeatedly highlighted by Fed Chairman Jerome Powell, as the institution strives to ensure that growth economy benefits all categories of the population.
” Representative sample ”
“The point of having a seven-member (Fed) board (…) is to have a cross-section of America”, not “just white men who graduated from the same three schools in the Ivy League” – which brings together eight prestigious American universities, including Harvard and Yale – David Wessel, monetary policy expert at the Brookings Institution, told AFP.
These two economists are “exceptionally qualified”, also affirmed the National Economic Association, of which they are both presidents.
But support also came from the Republican camp. Kevin Hassett, a leading economist under Donald Trump’s administration, hailed the appointment of Philip Jefferson, “exactly the type of economist that needs to be at the Fed in these difficult times.”
Joe Biden also reappointed the president of the institution, Jerome Powell, for a second four-year term, and chose Democratic Governor Lael Brainard as vice-president. The Senate has not yet decided.