Fed Chair Jerome Powell may face opposition from progressives for second term

Описание: CNBC's 'Squawk Box' team discusses whether Federal Reserve Chairman Jerome Powell will get another term as the chairman. The Wall Street Journal reports Powell is facing opposition from progressives. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

We will soon find out what the Federal Reserve’s leadership will look like under President Joe Biden.

The president is set to make a decision this fall on whether to stick with Chairman Jerome Powell, whose term ends in February, or tap one of his respected colleagues to lead one of the world’s most powerful economic institutions.

Wall Street is pushing Biden to reappoint Powell for a second term. But progressives are calling for a fresh face atop the central bank.

The Fed chair job isn’t the only role up for grabs. The term for Vice Chairman Randal Quarles, the central bank’s point person for regulation, expires in October. And this all means that Fed Governor Lael Brainard could be in line for a promotion.

Political aides who spoke to CNBC about the Fed turnover said the Biden administration is considering sending its nominations as a bundle to the Senate Banking Committee in September. They stressed that the search progress is ongoing, and that the timeline could shift based on whether Biden decides to renominate Powell.

A strong indication of Wall Street’s fear about Powell’s possible replacement came last month from Mike Feroli, chief U.S. economist at JPMorgan.

“Fed chair Powell’s response to the COVID-19 financial crisis and recession was aggressive, creative, and determined; his leadership during that period has justly received applause from economists and legislators across the political spectrum.”

But, Feroli said, “He is now at risk of losing his job.”

Placing the pieces

That’s because progressive Democrats want Brainard to replace Powell.

Her advocates say she would push the Fed to put a greater emphasis on bank regulation, income inequality and climate change.

Some Democrats, such as Biden Treasury Department nominee Graham Steele, have said it would be a “huge missed opportunity” not to replace Powell with a woman or member of a minority to lead an institution long dominated by white men.

Feroli said Powell pleased progressives by doubling down on the Fed’s commitment to maximum employment across demographics, but that the group is still frustrated with the former investment banker’s reluctance to address issues like the economic impacts of climate change.

The White House declined to comment on this story and has not publicly indicated whether the administration is looking for a new chairman. The closest the Biden administration has come to a public comment may have been Treasury Secretary Janet Yellen’s comments to CNBC last month.

Yellen, who made history as the first woman to lead the Fed, said the central bank has “done a good job” under Powell’s tenure.

Asked whether she supports Powell for a second term, Yellen said she would keep that opinion private for now. She will likely play an outsized role in advising the president since Powell and Brainard served as Fed governors while Yellen was chair of the central bank.

The Treasury Department declined to comment further for this story.

Yellen’s praise for the Powell Fed may have deflated some progressive Democrats, who hope Biden takes the opportunity to install a member of his own party.

“There are two dimensions. And one is how much [Powell] has aided and abetted the Fed as a whole in deregulating further than perhaps Congress told them to,” said Mike Konczal, director of macroeconomic analysis at the left-leaning Roosevelt Institute.

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