The New York representative Alexandria Ocasio-Cortez and other members of the Democratic party’s progressive caucus have urged Joe Biden to replace Jerome Powell as chairman of the Federal Reserve as part of a top-to-bottom makeover of the US central bank.
“As news of the possible reappointment of Federal Reserve Chair Jerome Powell circulates, we urge President Biden to re-imagine a Federal Reserve focused on eliminating climate risk and advancing racial and economic justice,” they said in a statement issued on Tuesday.
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Signatories to the letter include representatives Rashida Tlaib of Michigan, Ayanna Pressley of Massachusetts, Mondaire Jones of New York and Chuy Garcia of Illinois.
Powell’s term expires in February. A Republican and former investment banker, he was appointed by Donald Trump in 2017 but the following year incurred Trump’s ire after the Fed again raised its benchmark interest rate. The Biden White House has not said if Powell will be reappointed, though it is not unusual for a Fed chair to be reappointed following a change of administration.
Powell has been widely praised for responding swiftly to economic turbulence brought about by the coronavirus pandemic. Last week he signaled that the Fed was ready to begin easing economic stimulus but would not yet raise interest rates.
In the statement, the progressives gave Powell credit for prioritizing the Fed’s goal of full employment, but said the central bank had not done enough to make mitigating the effects of climate change central to its mission.
“Under his leadership the Federal Reserve has taken very little action to mitigate the risk climate change poses to our financial system,” the statement read, pointing to the Fed’s “D-rating” for its approach to climate risk policies from Positive Money’s Global Central Bank Scorecard, which placed it at the bottom of the G20 group of leading central banks.
Powell has said the climate crisis poses “profound challenges for the global economy and certainly the financial system” and the Fed joined an international network of global financial regulators focused on climate change late last year.
But that acknowledgment did not go far enough, the caucus indicated.
“At a time when the Intergovernmental Panel on Climate Change is warning of the potential catastrophic and irreversible damage inflicted by a changing climate, we need a leader at the helm that will take bold and decisive action to eliminate climate risk,” they added.
The members also criticized the central bank for rolling back certain financial regulations enacted after the Great Recession – actions that Powell has acknowledged while expressing confidence in the stability of the financial system.
The “weakening” of financial regulations that were specifically created to prevent such a disaster from happening again, they said, “risks the livelihoods of Americans across the country.
“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. We urge the Biden Administration to use this opportunity to appoint a new Federal Reserve Chair.”
In comments to CNN, a White House official said that Biden “will appoint the candidates who he thinks will be the most effective in implementing monetary policy” when it comes to re-appointing Powell or selecting a new Fed chairman.
