Two more Democrats urge Biden not to pick Powell for Fed chair

Sens. Sheldon Whitehouse (D-R.I.) and Jeff Merkley (D-Ore.) are urging President Biden not to nominate Jerome Powell to serve another term as chairman of the Federal Reserve, warning that his refusal to use the Fed to prepare the economy for the impact of climate change is a major problem.

The Democratic senators join Sen. Elizabeth Warren (D-Mass.) in trying to steer Biden away from Powell, who was appointed chairman by former President Trump, and toward picking Lael Brainard, the only Democrat on the central bank’s seven-member board. 

“Jerome Powell refuses to recognize climate change as an urgent and systemic economic threat,” Whitehouse and Merkley wrote in a joint statement. 

“During his tenure, Chair Powell first ignored climate change and then resisted calls for the Fed to use its tools to fight it, arguing that climate change ‘is really an issue that is assigned to lots of other government agencies, not so much the Fed,’ ” they said. 

Brainard, who is emerging as progressives’ favorite candidate to serve as Fed chair, by contrast, says the central bank has a responsibility to prepare large financial institutions for economic disruptions caused by climate change.

The Democratic senators noted in their statement on Friday that Powell told lawmakers at a hearing earlier this year that “we are not and we don’t seek to be climate policymakers,” summing up his view of the powerful central bank’s role.

Whitehouse and Merkley argue that’s out of step with the Biden administration’s focus on climate and what they see as the pressing need to address rising global temperatures immediately. 

They say the Fed needs to take action immediately, warning that the changing climate is worsening supply chain problems and increasing the volatility of commodity prices.

“President Biden must appoint a Fed Chair who will ensure the Fed is fulfilling its mandate to safeguard our financial system and shares the Administration’s view that fighting climate change is the responsibility of every policymaker. That person is not Jerome Powell,” the senators wrote. 

Biden is expected to announce his decision on who should next chair the Fed before Thanksgiving. 

Whitehouse voted to confirm Powell as Fed chairman in January of 2018, when he replaced Janet Yellen, who now serves as Biden’s Treasury secretary. Powell received overwhelming support in the Senate, winning confirmation by a vote of 84-13.

Merkley was one of 13 no votes on Powell’s nomination, along with Warren. 

Warren, a leading progressive on the Senate Banking Committee, has also come out strongly against picking Powell to serve another term as Fed chair, and called him “a dangerous man” to head the bank. 

“Your record gives me grave concerns. Over and over, you have acted to make our banking system less safe,” she said at a Sept. 28 hearing, announcing her opposition to him. 

Brainard signaled last month that she believes the Fed has a role in responding to the economic impacts of climate change and noted that the central bank is trying to project how climate-related economic impacts would affect the financial system.

“I anticipated it will be helpful to provide supervisory guidance for large banking institutions in their efforts to appropriately measure, monitor and manage material climate-related risks, following the lead of a number of other countries,” she said at a Fed conference.

But that position has put her at odds with Sen. Pat Toomey (Pa.), the top-ranking Republican on the Senate Banking panel, who said Thursday that “I have a lot of serious concerns about Governor Brainard if she were to be nominated to be chair.”

Toomey says it’s “beyond the scope of the Federal Reserve’s mission” to use “financial regulation and supervision to further environmental policy objectives.”

“We urge you to refrain from taking any additional actions with respect to climate-related risks that would impose certain costs for uncertain benefit,” he wrote in a letter to Powell earlier this year.