Janet Yellen Gets a Chance to Shape the Fed, This Time From Outside

Ms. Yellen has repeatedly praised Mr. Powell’s performance.

“He’s doing extremely well,” she told The New York Times in early 2020, discussing Mr. Powell’s conduct as he came under attack from the Trump White House.

But Mr. Powell has opponents among more progressive groups. He often deferred to the Fed’s vice chair — a Trump appointee — for supervision when it came to regulation, regularly voting for tweaks to bank and financial rules that chipped quietly away at postcrisis financial reforms. He has also been criticized by climate focused groups for being too slow to elevate the Fed’s role in policing environment-related finance. Climate activists plan to protest at the Fed’s annual symposium this year in Jackson, Wyo., and Mr. Powell “will be a key target,” Thanu Yakupitiyage, head of U.S. communications at 350.org, said in an email. The group is one of the protest’s key organizers.

Regulation and climate are key reasons some Democrats are lining up behind Ms. Brainard, the Fed governor and another leading candidate. Ms. Brainard, who also has a good relationship with Ms. Yellen, opposed Trump administration efforts to lighten bank oversight by loudly dissenting against a spate of regulatory decisions, often releasing meticulous statements detailing where they went awry.

She is seen as a powerful and effective Fed governor, one who played a key role in shaping pandemic response programs. And while they are closely aligned on monetary policy, she has distinguished herself from Mr. Powell by pushing for a bigger role for the Fed on climate issues and a more proactive stance toward developing a digital currency.

She also could help to anchor a leadership team that could usher in a fresh era for the Fed, her supporters argue.

Andrew Levin, a former Fed economist, is one of several people who are pushing the idea that the White House appoint Ms. Brainard as chair and Sarah Bloom Raskin, a former top Fed and Treasury official, to the central bank’s top regulatory job. Mr. Levin, now a professor of economics at Dartmouth, would also favor nominating as vice chair Lisa Cook, a professor from Michigan State University who has researched racial disparities and labor markets and has worked to improve diversity in economics.

Article source: https://www.nytimes.com/2021/08/16/business/economy/yellen-powell-federal-reserve.html