The three economists through whom US President Joe Biden wants to bring diversity to the powerful Federal Reserve (Fed, the US central bank) will have to overcome criticism this Thursday (3) before the Senate Banking Committee, who will decide on your nomination.
Republicans, but also the US Chamber of Commerce, disapprove of the Democratic president’s options because, according to them, they threaten the Fed’s sacred independence at a time when it needs to fight inflation.
The White House wants to take advantage of the three vacancies to be filled among the seven seats on the Fed’s Board of Governors to fulfill Biden’s pledge to bring diversity to the institution.
The most talked about nomination is that of Lisa Cook, a professor at Michigan State University and a former economic adviser to former President Barack Obama, who would become the Fed’s first black female governor.
On the other hand, Philip Jefferson, a professor and administrator at Davidson College in North Carolina, would be the fourth African-American man in the job since the central bank was created in 1913.
And for the key post of vice president responsible for banking supervision, Biden chose Sarah Bloom Raskin, a former Treasury Department number two under the Obama administration.
Critics against her point to her positions on banking regulation and climate change. Furthermore, she is married to a Democrat from the House of Representatives.
The Senate banking committee will receive a joint hearing of the candidates before the vote. If confirmed, the majority of the Fed’s board of trustees would be women for the first time in history, and the majority would be appointed by a Democratic president.
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Republican Senator Pat Toomey, a member of the Banking Committee, rejects the nominees because none of them come from the energy sector.
The Chamber of Commerce reproaches Sarah Bloom Raskin for finding her too aggressive in focusing on the role of banks in the fight against climate change.
Conservative George Will accused the Fed of being politicized, even writing in an opinion column that “(Lisa) Cook’s peer-reviewed academic writings relevant to monetary policy are, to be polite, in short supply.”
However, economists and Fed observers say these criticisms are unfounded and even, in some cases, motivated by skin color.
Cook and Philip Jefferson have acted on inequality in the labor market, an issue that Federal Reserve Chairman Jerome Powell has highlighted several times as the institution strives to ensure that economic growth benefits all strata of society.
“The interest in having a board made up of seven members (…) is to have a representative sample of the United States”, and not “only white men graduated from the same three Ivy League universities”, David Wessel, an expert on monetary policy at the Ivy League, told AFP. Brookings Institution, in reference to the most prestigious universities in the country.
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