Senate confirms Jerome Powell for Federal Reserve chair
WASHINGTON — The Senate on Tuesday confirmed Jerome Powell as the next chairman of the Federal Reserve, overwhelmingly voting President Trump's nominee to a 4-year term as one of the world's most powerful stewards of the global economy.
The Senate approved Powell by a margin of 85 to 12, as the nominee was supported by a majority of Democrats and nearly all Republicans.
Powell, a current Fed governor and former financial firm executive, will replace outgoing Fed Chairwoman Janet Yellin, whose term ends in February. First appointed to the Fed board in 2012 by President Obama, Powell is expected to largely continue Yellen's policies — a contrast from other candidates Trump considered who had criticized the Fed under Yellen for its focus on low interest rates and economic stimulus.
85 yays, 12 no votes on Trump pick for Fed chairNos -8 Ds 1. Blumenthal (CT)2. Booker (NJ)3. Gillibrand (NY)4. Markey (MA)5. Merkley (OR)6. Sanders (VT)7. Warren (MA)8. Harris (CA)4 Rs-9. Cruz (TX)10. Paul (KY)11. Rubio (FL)12. Lee (UT) https://t.co/NgsmFDkcA6— Jeff Stein (@JStein_WaPo) January 23, 2018
Powell, a former Carlyle Group executive, also worked in president George H.W. Bush's Treasury Department, as well as at the Bipartisan Policy Center, a Washington think tank.
Powell worked closely with Yellen and her predecessor, former Fed Chairman Ben Bernanke, noted David Wessel, a senior fellow at the Brookings Institution.
"Much of what he knows comes from them," Wessel said. "If you wanted to be a central banker and wanted good teacher, that's a pretty great faculty. I think we'll benefit from what he learned."
As Fed chair, Powell will be tasked with two major balancing acts. The bank is tasked with minimizing unemployment while managing inflation. Broadly, the Fed tries to stimulate the economy, creating jobs and fighting unemployment, by lowering interest rates. Raising interest rates is typically aimed at fighting inflation.
Powell will oversee an economy where unemployment is at 4.1 percent, job growth has been steady but unspectacular, and inflation remains at or below the Fed's targets. The economy however, faces persistent and growing inequality, and workers have seen only limited wage gains during the long, slow recovery from the Great Recession.
Powell will take over Yellen's project of unwinding the extraordinary efforts the central bank took to stimulate economic growth in the aftermath of the Great Recession. The Fed has gradually increased interest rates in recent years after leaving them at record lows for the better part of a decade.
Powell is also tasked with overseeing the bank's efforts to regulate the financial sector, working to implement and enforcement many of the rules aimed at warding off another financial crisis.
The regulatory law Congress passed in response to the financial crisis left the Fed significant discretion in writing new rules — effectively relying on the bank's regulators to maintain a healthy financial sector while protecting consumers and the economy as a whole.
Jerome Powell's challenge at the Fed: Keep the economy humming while raising rates https://t.co/WSON8x9KFf— The Wall Street Journal (@WSJ) January 22, 2018
The Fed is not part of the administration, and Powell will have broad autonomy — in conjunction other Fed officials - to make his own decisions. But despite passing the Senate on a bipartisan basis, he'll face scrutiny from both ends of the U.S. political spectrum.
In a speech on the Senate floor on Tuesday, Sen. Elizabeth Warren, D-Mass., said Powell would move to dismantle some of the new authorities given to the Fed under the Dodd-Frank Act, the 2010 banking law signed by President Obama. At his Senate Banking Committee hearing last November, Powell said that regulations on Wall Street are "tough enough." (Warren was the only member of the committee to vote against Powell.)
"I'm deeply concerned that as soon as Governor Powell unpacks his boxes in the Chairman's office, he will begin weakening the new rules Congress and the Fed put in place after the 2008 financial crisis," Warren said, according to prepared remarks. "We need someone who believes in tougher rules for banks — not weaker ones. That person is not Governor Powell."
Across the aisle, conservatives say the Fed's new powers under Dodd-Frank have slowed growth in the American banking sector and should be restrained by the legislative branch. Rep. Warren Davidson, R-Ohio, who has a bill to impose new restrictions on the Fed's ability to enact new regulations, has already pushed Powell to commit to working with Congress on reducing the Fed's reach.
"My hope is that Jerome Powell will be less of an activist with an ideology and recognize the Federal Reserve is as a regulator clearly subject to the authority of Congress," Davidson said.