They acknowledged that the Fed under Powell “has made positive changes” by steering the central bank toward a greater emphasis on reaching full employment. But they said they want to see someone at the helm who is more aggressive on financial regulation and climate change.
“Under his leadership, the Federal Reserve has taken very little action to mitigate the risk climate change poses to our financial system,” said Ocasio-Cortez (N.Y.), Tlaib (Mich.) and Pressley (Mass.), all of whom sit on the House Financial Services Committee.
“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 said.
They also cited moves by the Fed under Powell to reduce regulations on big banks, such as giving them more leeway to make risky trades and more advance information about tests that examine if they could withstand another major economic downturn.
“Weakening financial regulations that were specifically created to prevent such a disaster from happening again risks the livelihoods of Americans across the country,” the lawmakers said. “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.”
The three representatives don’t cite any particular alternative to Powell, but the most prominent candidate to replace him is Lael Brainard, a current member of the Fed board who would be expected to continue what Democrats like about Powell’s interest rate policy while being closer to their stance on issues like regulation and climate change.
The lawmakers’ statement comes after 22 liberal groups similarly joined together to urge Biden to pick Federal Reserve leaders who will shift the central bank’s approach on these same issues, though they stopped short of opposing Powell by name.
That letter implicitly nodded to the possibility that Biden might name an aggressive regulator to replace outgoing Vice Chair of Supervision Randal Quarles, to satisfy one of the chief complaints of progressives that Powell’s Fed has been too lenient. But they suggested that appointing a more liberal person to that position wouldn’t be enough.
“We encourage you to remember that the Fed is a hierarchical institution, in which the Vice Chair and Vice Chair for Supervision wield considerable agenda-setting power, but are ultimately deferential to the Chair’s initiatives,” they said.