(Politico) Sen. Elizabeth Warren on Tuesday said she opposes a second term for Federal Reserve Chair Jerome Powell, calling him a “dangerous man” because of the financial regulations that have been loosened during his tenure.
“Your record gives me grave concern,” the Massachusetts Democrat told Powell while he was testifying before the Senate Banking Committee. “Over and over, you have acted to make our banking system less safe, and that makes you a dangerous man to head up the Fed. And it’s why I will oppose your renomination.”
Warren's statement makes her one of only a few Democratic lawmakers to publicly call for the replacement of Powell — a Republican and a Trump appointee — when his term ends early next year. Last month, a group of House progressives including Rep. Alexandria Ocasio-Cortez (D-N.Y.) said they want to see someone at the helm of the central bank who is more aggressive on financial regulation and climate change.
The choice of who will lead the central bank is one of the most important personnel decisions that President Joe Biden will make, with the Fed playing a pivotal role in helping the economy emerge from the pandemic as job growth falters and supply chain issues threaten the recovery.
The prospect of Powell’s reappointment has split opinion among liberal advocates and lawmakers, with multiple lawmakers like Sen. Jon Tester (D-Mont.) saying he deserves a second term. Powell first joined the Fed’s board in 2012 as an appointee of former President Barack Obama and then was promoted to chair by former President Donald Trump in 2018.
Warren criticized Powell for weakening annual tests that examine whether big banks could withstand a severe recession. Under the changes she cited, the Fed no longer “fails” banks for having insufficient loss-absorbing capital but would instead use the exams to set their capital requirements going forward. Banks still face restrictions on their dividend payments and stock buybacks if their capital levels drop below a certain threshold.
Powell disagreed that the so-called stress tests had been weakened, noting that capital levels at big banks were at “multi-decade highs.” But he said he was willing to review that and other regulatory rollbacks that had happened under his watch. “Anything we did is fair game to look at again,” he told Warren.
At a press conference last week, the Fed chief did offer an olive branch to progressives who have faulted him for deregulation. He said he defers to the person who holds the Fed’s top regulatory job, the vice chair of supervision, a position that will open up next month. Observers have speculated that Biden might appoint a tougher regulator in that role but also keep Powell as Fed chair.
“It’s fully appropriate for a new person to come in and look at the current state of regulation and supervision and suggest appropriate changes, and I welcome that,” Powell said.
