Biden’s three new nominees aim to add diversity to Fed board

Board would be first with women in the majority, including first Black woman

Sen. Jack Reed, D-R.I., said the nominees would make the Fed board more representative of those it serves.  (Tom Williams/CQ Roll Call file photo)
Sen. Jack Reed, D-R.I., said the nominees would make the Fed board more representative of those it serves. (Tom Williams/CQ Roll Call file photo)
Posted January 14, 2022 at 10:06am

President Joe Biden nominated Sarah Bloom Raskin to be the Federal Reserve’s vice chair for supervision, and Lisa Cook and Philip Jefferson to fill the remaining open seats on the board, the White House said. 

“They will bring long overdue diversity to the leadership of the Federal Reserve, including the first Black woman in history to serve on the Board and the fourth Black man to serve on the Board,” the White House said in a statement, referring to Cook and Jefferson. 

The president has also nominated Fed Chairman Jerome Powell to another term and board member Lael Brainard to be vice chair. The Senate Banking Committee took testimony from both of them this week. 

“If all five are confirmed, the Board will be majority women,” the White House statement said. “When we have leaders in the Federal government that reflect the diversity of our country, it results in better outcomes for all Americans. That is especially true in our economy where too many groups historically have been left behind, or left out altogether.”

The nominees would begin terms as the Fed faces surging inflation, volatility in the labor markets, uncertainty about the economy as another variant of COVID-19 spreads, and with progressives urging it to include the climate among the risks to the economy.

“President Biden is showing the country what a Federal Reserve standing on the side of workers and their local communities looks like,” Senate Banking Chair Sherrod Brown, D-Ohio, said in a statement. “We need leaders who will ensure that workers and their families reap the benefits of the economic growth they create, and who will not repeat past mistakes that led to a booming recovery for Wall Street, and a weak one for everyone else.”

“They will also bring important perspectives to the Federal Reserve Board about the economic issues women, Black and brown workers, and rural and industrial communities across the country face. I urge my colleagues to support these nominees and look forward to their hearings before the Banking and Housing Committee,” he said. 

Senate confirmation of the three would give Democrats a majority on the Fed board. Powell, a Republican, would remain chairman if the Senate confirms him for a second term, as is expected. 

“These nominees will keep the Fed focused on inclusive, long-term job growth while ensuring the Fed is more representative of the people it serves.  President Biden is signaling his commitment to putting families and workers first and holding Wall Street accountable,” Sen. Jack Reed, D-R.I., a member of the Senate Banking Committee, said in a statement.

Setting the regulatory agenda

If confirmed as vice chair for supervision, Raskin would be in charge of setting the Federal Reserve’s regulatory agenda. She previously sat on the Fed board and held a top position at the Treasury. She’s been outspoken about the financial risk posed by climate change and the need for regulators to address it.

Her comments on climate drew opposition from Sen. Patrick J. Toomey, R-Pa., the ranking member of Senate Banking. 

“Sarah Bloom Raskin has specifically called for the Fed to pressure banks to choke off credit to traditional energy companies and to exclude those employers from any Fed emergency lending facilities,” Toomey said. “I have serious concerns that she would abuse the Fed’s narrow statutory mandates on monetary policy and banking supervision to have the central bank actively engaged in capital allocation.”

The vice chair for supervision position took on increased significance for progressives in Congress after Biden nominated Powell for a second term as Fed chairman. 

Sen. Elizabeth Warren, D-Mass., at a Senate Banking Committee hearing in November, pressed Powell on whether he considered himself legally bound to bring policies proposed by the vice chair for supervision before the full board for a vote even if he disagreed with the proposal. Powell said he did. 

Raskin, a professor at Duke University School of Law, was a member of the Fed board during the Obama administration from 2010 to 2014, where she was known for her focus on consumer protection and economic inequality. The Senate voted unanimously to confirm her at the time.

Raskin left the board to take the second-in-command position at the Treasury Department, where she worked until 2017. At Treasury, she led the department’s work on cybersecurity, including by leading the development of the G-7 countries’ 2016 cybersecurity guidance for the financial sector. The Senate confirmed her to the position by voice vote.

She is married to Rep. Jamie Raskin, D-Md., the lead House manager last year of President Donald Trump’s second impeachment. 

Cook, an economics and international relations professor at Michigan State University, would be the first Black woman to join the board. Jefferson, an economics professor and vice president for academic affairs at Davidson College in North Carolina, would be the fourth Black man. 

Senate Democrats have urged Biden to improve the diversity at the Fed and other financial regulators.

“No one can deny that people of color have been largely excluded from top positions at economic and regulatory agencies,” Reed said. “These appointments will help reverse that trend. And these highly qualified nominees are in keeping with the Fed’s goal of building a more just financial system and promoting inclusive economic growth and development.”

Toomey didn’t say whether he would support or oppose Cook and Jefferson, but said he would look closely at their experience, judgment and policy views.

Cook’s focus as an academic includes macroeconomics, development, innovation, economic history and international finance.

She has written about the intersection of race, policy and economics and previously was president of the National Economic Association, a professional organization to promote Black economists and research to improve economic growth among Native American, immigrant, African American and Latino communities.

Cook was a member of both Biden’s and President Barack Obama’s transition teams. She was a senior economist on the White House Council of Economic Advisers from 2011 to 2012 and worked for the Treasury Department from 2000 to 2001. 

Cook held visiting positions at the Federal Reserve banks of Minneapolis, New York and Philadelphia and National Bureau of Economic Research. 

Senate confirmation would mark a return to the Fed for Jefferson, who worked as a research economist for the board from 1996 to 1997 and later held a visiting appointment at the Federal Reserve Bank of New York, though he has spent most of his career in academia. 

Before joining Davidson, Jefferson taught at Swarthmore College in Pennsylvania from 1997 to 2019. While there, Jefferson also held political office. He was elected to the town’s Borough Council for a four-year term in 2008.