By Pam Martens and Russ Martens: February 9, 2022 ~
At 3:00 p.m. last Friday, the Federal Reserve quietly released the following statement:
“The Federal Reserve Board on Friday named Jerome H. Powell as Chair Pro Tempore, pending Senate confirmation to a second term as Chair of the Board of Governors. The action, effective February 5, enables him to continue to carry out his duties as Chair after the expiration of his term on the same day, and while the confirmation process is underway. In its annual organizational meeting in January, the Federal Open Market Committee separately named him as its Chair.”
This is the first time in a quarter century that a Fed Chairman’s term has lapsed before he was reconfirmed by the Senate. According to Reuters, the last time it happened was 1996 when Alan Greenspan served from March 3 to June 20 as Fed Chair Pro Tempore.
Powell has not even made it to a vote in the Senate Banking Committee, which has to happen before the full Senate can vote on his confirmation. So what’s going on? It appears that Democrats are playing hard ball since Republicans are waging a war against two of Biden’s other three nominees to serve on the Fed’s Board of Governors.
The two nominees under withering attack by Republicans are Sarah Bloom Raskin for Vice Chairman for Supervision and Dr. Lisa Cook for Governor. There is much less push back on the third nominee, Dr. Philip Jefferson.
Raskin is more than qualified as a former Fed Governor and former Deputy Treasury Secretary. But as Vice Chairman for Supervision, she would be in charge of supervising the megabank holding companies on Wall Street. The Fed has effectively outsourced that job to the New York Fed and Wall Street likes it that way. The megabanks on Wall Street literally own the New York Fed and its perpetual bailout spigot, so they are not happy about any supervision coming from Washington.
Helping Wall Street out in its push against Raskin is the fossil fuels industry and their toadies. On February 2, the Wall Street Journal had the audacity to run a propaganda piece by executives of two fossil fuel trade associations, masquerading as an “opinion” article.
The two executives, Tim Stewart, President of the U.S. Oil and Gas Association, and Kathleen Sgamma, President of Western Energy Alliance, which represents oil and natural-gas producers in the West, wrote that Raskin believes that fossil fuels pose “climate-change-related risks to the economy.”
According to a Gallup poll released in April of last year, 43 percent of Americans “worry a great deal” about climate change and a majority of Americans worry “at least somewhat.” Raskin is simply responding to the legitimate concerns of the American people, something that the Fed has said its listening tours around the country have been all about.
The attacks on Raskin have more to do with the fossil fuel lobby groups wanting to flex their muscles for their clients and Wall Street fearing actual supervision and nothing to do with Raskin’s credentials for the job.
Republican Mitch McConnell of Kentucky took to the Senate floor last Thursday to excoriate Raskin with the old trope that she will “pursue liberal environmental goals.” Shouldn’t saving the planet for our children and grandchildren be a goal that we can all unite around?
The Ranking Member of the Senate Banking Committee, Senator Pat Toomey, Republican of Pennsylvania, spent much of his opening remarks at the confirmation hearing for the Fed nominees last Thursday to excoriate Raskin over her stance on climate change.
Jefferson and Cook are both Black nominees. Jefferson is Vice President for Academic Affairs, Dean of Faculty and Professor of Economics at Davidson College. Jefferson previously served as Chair of the Economics Department at Swarthmore College. He was also previously an economist at the Board of Governors of the Federal Reserve System.
Cook is Professor of Economics and International Relations at Michigan State University. She earned a Ph.D. in economics from the University of California, Berkeley with fields in macroeconomics and international economics. She was previously an adjunct professor at Harvard University’s Kennedy School of Government.
If Lisa Cook is confirmed, she would be the first Black woman on the Fed’s Board of Governors in its 109-year history. (It seriously pains us to have to write that sentence.)
Last Thursday, Toomey criticized Professor Cook as a Fed nominee in his opening statement. He said “She has a Ph.D. but no academic work in monetary economics.” Jerome Powell, who has heavy Republican backing for a second term, has no Ph.D. in economics but instead has a law degree and got rich at the vulture fund Carlyle Group. Powell also presided over the largest trading scandal in Fed history. Exactly what his involvement in that scandal will turn out to be is unknown at this point because the results of the investigation, now entering its fifth month, are unknown.