Risk & Compliance

Progressives Urge Biden to Replace Fed Chief

A group including Rep. Alexandria Ocasio-Cortez says the Fed needs to be focused on "eliminating climate risk and advancing racial and economic jus...
Matthew HellerSeptember 1, 2021

A group of progressive Democrats has called for Federal Reserve Chair Jerome Powell to be replaced, saying the central bank needs a leader who is more aggressive on financial regulation and climate change.

Powell’s term as chair ends in February and President Joe Biden is expected to decide as early as next month whether to reappoint him.

“We urge President Biden to re-imagine a Federal Reserve focused on eliminating climate risk and advancing racial and economic justice,” progressives including Reps. Alexandria Ocasio-Cortez, Democrat from New York, Michigan Democrat Rashida Tlaib, and Ayanna Pressley, Democrat from Massachusetts, said in a statement.

“To move forward with a whole of government approach that eliminates climate risk while making our financial system safer, we need a chair who is committed to these objectives,” they said.

As Politico reports, “The statement opposing Powell by the high-profile progressive Democrats is part of a mounting effort on the left to urge Biden to reshape the Fed, though the prospect of Powell’s reappointment has split opinion among liberal advocates and lawmakers.”

Some liberals contend Powell undermined the economy when he scaled back key reforms to regulate big banks that Congress passed after the 2008 financial crash, including capital and liquidity requirements, stress tests, and the Volcker Rule, which limits how much of their everyday customers’ money they can invest in risky trading activities.

The three progressives plus Reps. Mondaire Jones, New York Democrat, and Illinois Democrat Chuy García agreed, arguing that “Weakening financial regulations that were specifically created to prevent such a disaster from happening again risks the livelihoods of Americans across the country.”

The group also faulted the Fed for taking “very little action to mitigate the risk climate change poses to our financial system,” citing its D-minus grade from Positive Money’s Global Central Bank Scorecard.

In the Senate, Banking Committee Chair Sherrod Brown, Ohio Democrat, and Sen. Elizabeth Warren have argued that Powell should watch more rigorously over Wall Street. But Business Insider said that “For now, those calling for Powell’s replacement are likely in the minority. The Fed chair has largely enjoyed bipartisan support over his tenure, particularly for his actions during the COVID-19 recession.”

Kevin Dietsch via Getty Images