Biden faces big bets with progressives in Fed election

President BidenJoe Biden Video showing violence removed from Rep. Gosar’s account after pushback Federal judge rejects Trump’s effort to block Jan.6 documents Expected price increases raise political stakes for Biden MORE he faces a high-stakes decision about the leadership of the Federal Reserve that could also shape his relationship with progressives.

Fed Chairman Jerome Powell has earned high marks for helping guide the national economy through the depths of the COVID-19 pandemic, but liberals in the House and Senate are calling for change.

They want Biden to pick Lael Brainard for the job rather than rename Powell.

Biden met with both Brainard, a member of the Federal Reserve Board of Governors, and Powell, the acting chairman who was appointed by the former President TrumpDonald Trump Federal judge rejects Trump’s effort to block the release of the documents on January 6 Sununu underscores the uncertain path of the Republican Party to obtain a majority in the Senate Trump endorses Idaho lt. gov. against the incumbent Republican leader MORE, at the White House on Thursday. They are seen as the two pioneers for the job and no other names have been leaked to the public.

Biden said last week that he will make a decision “fairly quickly.”

Brainard, if elected and confirmed by the Senate, would be the second woman to chair the Fed after Janet yellenJanet Louise YellenBiden Meets with Potential Fed Picks Powell, Brainard: White House Report Calling on Senate Democrats to Meet with Powell This Month: Report Democrats Call on Biden to Sanction Climate Change Taxpayers PLUS and his selection would be hailed by progressive leaders like Sen. Elizabeth warrenElizabeth Warren Publisher Sues Warren for Criticizing Book COVID-19 Critical Trend Probably Missed on Election Night: Hillicon Valley Asian American Women’s Leadership: Robinhood Rape Exposes Data on Millions MORE (D-Mass.). She is the only Democrat currently serving on the seven-member board.

Warren has praised Brainard for making “a good case for why it’s the Federal Reserve’s job to be that cop there and make sure the bigger financial institutions don’t put our economy at greater risk.”

At the same time, he has accused Powell of taking deregulatory measures that have made the banking system less secure and has called him “a dangerous man to head the Fed.”

At a hearing in September, Warren cited steps taken under Powell’s leadership to weaken stress tests, remove Volker Rule restrictions, and ease liquidity requirements and financial institutions.

The stress tests were designed to ensure that banks could survive without help from taxpayers in case the economy suddenly took a turn for the worse. Warren argues that the Fed’s 2019 decision to provide more information on the models used for testing made it easier for banks to pass the tests without necessarily propping up their balance sheets.

In 2020, Powell exempted short-term business holdings from complying with the Volcker rule separation from commercial banking and riskier investments.

And in 2019, the Fed weakened the requirement that banks hold high-quality liquid assets to back their other investments, according to Warren.

Brainard’s selection would be a welcome victory for progressives who have had to grit their teeth and see the centrist Sens. Joe manchinJoe Manchin: Expected Price Hikes Raise Political Stakes for Biden Justice Co-Founder Democrats: Democrats Have Allowed Manchin, Sinema to Become Party “Dictators” Biden Calls for Democratic Unity at DNC ​​Event MORE (DW.Va.) and Kyrsten CinemaKyrsten SinemaJustice Democrats co-founder: Democrats have allowed Manchin, Sinema to become “dictators” of the Galician party in a possible candidacy for 2024: “I never say no to the future” Pick a moment and stick with it MORE (D-Ariz.) It removed key parts of Biden’s Build Back Better agenda, such as a national paid family leave program, the $ 150 billion Clean Electricity Performance Program, and higher tax rates for corporations.

A Democratic Senate aide said electing Brainard “would make progressives very happy.”

The aide said that while Powell has the support of many mainstream Democratic senators, Biden has to worry about growing frustration among liberals in and out of Congress.

“I think there is a feeling in the Bubbling House that they are so pissed off over this Sinema thing, Manchin. The world is doing everything possible for them and they are doing everything in their power to maintain these lofty goals, ”the aide said of anger among progressives over the concessions made by the White House to centrists in the negotiations on the reconciliation package.

Democratic strategist Steve Jarding said electing Brainard would be a smart political move because it would give progressives a victory without suffering much or no political setback.

“It would be easier for Biden to give it to the progressives because it’s a little bit under the radar and at some point Biden will see it and the Democrats will see that progressives took a ride in Virginia, at least they weren’t. did not turn on for Terry McAuliffeTerry McAuliffeBiden Appeals for Democratic Unity at DNC ​​Event Sununu’s Announcement Gives Democrats a Lifeline Democrats Must Develop Voter Communication Strategies MORE – They are going to see that progressives in the suburbs matter and they have to be excited, ”he said. “At some point, Biden has to throw a bone at them.”

While most of the attention in Washington has been on independent voters leaning toward the Republican nominee Glenn youngkinGlenn Youngkin’s departure Sununu underscores the GOP’s uncertain path to winning a Senate majority Biden Calls for Democratic Unity at DNC ​​Event Tell the Truth About Critical Race Theory MORE In the highly-watched Virginia gubernatorial race, Jarding said the decline in enthusiasm among progressive voters was also a key factor.

Its. Tim kaineTimothy (Tim) Michael KaineKaine: Democrats “Wrecked Timing” of Infrastructure and Spending Bills Sunday Shows Progress: House Passes Bipartisan Infrastructure Bill; Democrats suffer electoral losses in Virginia The Hill’s Morning Report – Presented by ExxonMobil – House sprints for Build Back Better, infrastructure vote today MORE (D-Va.) And other Democrats blamed the loss of Democratic candidate Terry McAuliffe on the failure to pass the $ 1 trillion bipartisan infrastructure bill before the Nov. 2 election.

But there is also evidence that disappointment among progressives over Biden’s stagnant social spending agenda, and signs that it will have to be cut significantly to win Manchin and Sinema votes, also played a role.

Jarding said there was a drop among progressives in the Virginia elections. While total Democratic turnout was higher, it did not keep pace with growing Democratic registration in the state, he explained.

“When you look inside the numbers and you say, ‘Who really voted? Did the ideology appear? What type of voters showed up? ‘There was a statistically significant drop with self-identified progressives, ”he said.

McAuliffe won 200,000 more votes than outgoing Democratic Gov. Ralph Northam in 2017, but total voter registration in the state has increased by nearly 500,000 in the past four years.

Biden’s job approval rating has declined steadily from 57 percent in January to 42 percent at the end of October, according to Gallup. He lost support most dramatically among independents during that time, but erosion among Democrats was also a factor.

Gallup found that Biden’s approval rating was 98 percent among Democrats in January, compared with 92 percent in October.

It’s possible that Biden could stay with Powell and make progressives at least somewhat happy.

Randal Quarles, the Fed’s first vice president of supervision, announced Monday that he will leave the Fed at the end of the year. His deregulatory stance on the issues made him unpopular with liberals, and Biden could give them a victory by selecting a successor who favors more aggressive oversight.

Biden will also get two other slots, in addition to the one Quarles is vacating.

Robert Kaplan, president and CEO of the Federal Reserve Bank of Dallas, and Eric Rosengren, director of the Federal Reserve Bank of Boston, have also announced their retirements. Both Kaplan and Rosengren came under scrutiny earlier this year for trading stocks that may have benefited from the Fed’s accommodative monetary policy.

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