Progressive Democratic lawmakers urge Biden to replace Powell as Fed chair

Reps. Alexandria Ocasio-Cortez (D-N.Y.), Rashida Tlaib (D-Mich.) and Ayanna Pressley (D-Mass.) are urging President Biden to replace Federal Reserve Chair Jerome Powell as his term’s end date nears. 

The trio of progressive Democrats, along with Reps. Mondaire Jones (D-N.Y.) and Jesús García (D-Ill.), issued a statement on Monday calling on Biden to “re-imagine” a central bank that is “focused on eliminating climate risk and advancing racial and economic justice.”

The lawmakers said that while the central bank has “made positive changes to its approach to full employment reflected in the new monetary policy framework,” their “concerns” with Powell’s “track record are two-fold.”

They specifically took issue with what they saw as the little action his Federal Reserve has taken to “mitigate the risk climate change poses to our financial system,” citing the D-minus rating it received for its approach to climate risk policies from Positive Money’s Global Central Bank Scorecard.

That grade, according to the lawmakers, put the Federal Reserve “at the bottom of the G20 Central Banks.”

“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,” they wrote.

They also contended that the Federal Reserve under Powell’s leadership has “substantially weakened many of the reforms enacted in the wake of the Great Recession regulating the largest banks, including capital and liquidity requirements, stress tests, the Volcker Rule, and living will requirements.”

The lawmakers said rolling back those regulations that were established to prevent a disaster like the 2008 financial crisis from happening again “risks the livelihoods of Americans across the country.”

“To move forward with a whole of government approach that eliminates climate risk while making our financial system safer, we need a Chair who is committed to these objectives,” they wrote.

“We urge the Biden Administration to use this opportunity to appoint a new Federal Reserve Chair,” they added.

The group said that Biden’s “consequential appointment” for the chair of the Fed “has the potential to remake the composition of the Board of Governors.”

Some lawmakers and officials have joined the conversation regarding Powell’s future as February inches closer, airing their opinions on what Biden should do about the chief of the central bank as the country is still recovering from the difficulties faced amid the pandemic.

Powell, a Republican, was elevated to his position by former President Trump in 2018. Former President Obama, however, first appointed him to the Fed in 2012.

The chair of the Federal Reserve serves four-year terms.

Treasury Secretary Janet Yellen is reportedly backing Powell’s reappointment, Bloomberg reported earlier this month, citing multiple people with knowledge of the situation.

Sen. Steven Daines (R-Mont.) has also thrown his support behind Powell landing another term, asking Biden in a letter to renominate him to the job.

Progressives, however, are split when it comes to Powell’s reappointment.

Some lawmakers, economists and activists argue that his push for an employment-focused central bank is what the Fed needs to continue, while other liberals are contending that Powell undermined the economy when he scaled back key safeguards implemented by the Dodd-Frank Wall Street reform law.

Senate Banking Committee Chairman Sherrod Brown (D-Ohio) and Sen. Elizabeth Warren (D-Mass.) have both criticized Powell for his support of weakening bank rules.

Both, however, have not yet said if they will back his renomination.

The statement from Ocasio-Cortez, Tlaib and Pressley was first reported by Politico.