Joe Biden is ready to decide if he can re-elect Jay Powell for a second term Federal Reserve chairman – or rather – after weeks of skepticism within his Democratic party.
This year the process has become more complex, amidst the challenges of rising inflation and a commercial fraud which has tarnished the Fed’s record since September.
Some Democrats are pushing to keep Powell knowledgeable, while others such as Massachusetts senator Elizabeth Warren – whom they called “Fearsome man” on his laissez-faire role in financial management – he wants to change. Fed Governor Lael Brainard has come out as leading the way.
Although this year’s game has been unusual, the election for the Fed seat is often inconsistent. The president should maintain the Fed’s independence while finding a central banker with a similar financial mindset, and carefully reviewing the financial market and their political potential.
“One thing in history has been that these decisions. . . they are not the product of imagination, ”said Sarah Binder, professor of political science at George Washington University. “Election is not just about whether a president favors one person’s financial beliefs more than another.”
Historically, US presidents often choose to keep changing – but not always, and often it is difficult. This is something that some of Biden’s leaders in the Oval Office have to deal with.
When Jimmy Carter joined the Oval Office in 1977, Arthur Burns was the Fed’s chairman and faced stiff criticism over his handling of inflation since he was first elected by Richard Nixon. The following year Carter nominated William Miller to take over the presidency of the Fed, but the move came as a surprise. Miller was unable to control inflation, and he argued with the Federal Open Market Committee.
In 1979 Carter was forced to make a major educational reform in favor Paul Volcker, strongly opposed to inflation, to take over the position of chief executive of the central bank, and to appoint Miller as its Treasury Secretary.
In the summer of 1983, Ronald Reagan was under a lot of pressure to replace Volcker with the Fed leadership. Reagan Treasury Secretary Don Regan wanted the president to nominate “his man” to run the job – Volcker was a Democrat – while Republican lawmakers like Jack Kemp wanted a free market enthusiast.
“Reagan had every reason to choose a new person,” said Kaleb Nygaard, senior researcher at Yale University’s Program on Financial Stability.
With just six weeks to go before Volcker’s term expires, however, the President began his weekly radio address with what he described as a “news story”, announcing his re-election to the Fed for a second term.
“He is as committed as I am to continuing to fight inflation,” Reagan said. Four years later, Reagan decided to choose his own Fed seat, and put it in place Alan Greenspan the period lasted until 2006.
George HW Bush
In 1991 George HW Bush made one of the Fed elections, knocking Greenspan out for a second term. Even Milton Friedman, a defender of the Fed and a prominent Nobel laureate, reluctantly acknowledged: “According to [the Fed] present, Alan is as good a man as he is, ”states The New York Times.
Bush was not happy with Greenspan, however, until he criticized the Fed for its strong arguments, which led to the collapse that led to the defeat of Bill Clinton in 1992.
Clinton did not run for office until the end of her first term, when she decided to run for Greenspan for a third term in her 1996 election campaign. A few Democrats strongly opposed the decision, including Iowa senator Tom Harkin, who said under Greenspan, “the growth of employment and the lives of ordinary Americans were sacrificed in an effort to drive inflation”.
But Clinton was very pleased with Greenspan’s work, and she continued to do so until the end of her presidency. When Clinton took Greenspan for a fourth term in office, in 2000, he praised the “lack of professional integration, technical analysis and archeology”.
George W Bush
George W Bush took office in 2001 with Alan Greenspan serving his fourth term as Fed chairman. Greenspan favored himself at the Bush White House for providing careful assistance in his tax cuts – a fact he would later refute as wrong – and the young Bush arrested him for the fifth time in 2004.
The following year, Bush was faced with the daunting task of choosing a successor to Greenspan – and ended the election Ben Bernanke, federal governor of the Fed, although some Republicans supported Stanford economist John Taylor. “Ben has replaced the myth,” Bush said.
When Barack Obama took office in the midst of the economic crisis, he had no choice but to reassure Bernanke for a second term in office, due to the disruption of markets and banking systems as he tried to push his way out of the economy. .
He did so in August 2009, just before the end of Bernanke’s term. The controversy escalated four years later, when Obama decided to nominate former Treasury Secretary Larry Summers as Fed chair, but progressive Democrats, including Warren, opposed the idea.
Finally, Obama responded Janet Yellen, a professor at the University of California who for a long time served as vice president of the central bank, becoming the first woman to hold a top job.
In November 2017 Donald Trump decided to nominate Powell, the then Republican governor and Fed, to chair, violating a tradition that has existed since Carter’s new president re-elected central bank officials.
Trump also asked Yellen to revise his writing, and he was impressed with her condition. “I love him so much,” he told Fox Business’s approach. But the president eventually decided to change – according to The Washington Post, Yellen’s length maybe it was the reason.
Trump later regretted his decision and will eventually attack the central bank chief for his policies. “My only question is: who is our main enemy, Jay Powell or chair Xi?” Trump wrote in August 2019, about Chinese President Xi Jinping.