It was a contentious vote, 52-43, but the Senate agreed to confirm President Joe Biden’s nomination of Lael Brainard to a four-year term as vice chair of the Federal Reserve. Only seven Republicans voted for her confirmation. The Associated Press has the story:
Lael Brainard becomes lone Democrat on Federal Reserve board
WASHINGTON (AP) — The Senate on Tuesday confirmed the nomination of Lael Brainard to a four-year term as vice chair of the Federal Reserve, elevating her to the Fed’s No. 2 post in the midst of the central bank’s toughest fight against inflation in four decades.
Her confirmation came in a 52-43 vote in the Senate, with seven Republicans and all Democrats who were present voting in favor. President Joe Biden had nominated Brainard in November.
Brainard, 60, has been a member of the Fed’s Board of Governors since 2014, and her rise to a leading policymaking role follows an extensive career as an economic official during previous Democratic administrations. She was an adviser to President Bill Clinton in the late 1990s before becoming the top Treasury official for international affairs during President Barack Obama’s administration, from 2009 to 2013.
Brainard, the lone Democrat on the board for now, has generally supported keeping interest rates low to support growth and hiring, which makes her a “dove” in Fed parlance. “Hawks” generally support higher rates to ward off inflation.
Brainard’s confirmation comes as three other nominees for positions on the Fed’s board await confirmation. They include President Joe Biden’s nomination of Jerome Powell for a second four-year term as Fed chair. Powell has been serving in a temporary capacity since his first term expired in early February and has broad bipartisan support in the Senate.
Biden has also nominated Lisa Cook, an economics professor at Michigan State University, and Philip Jefferson, an economist and academic dean at Davidson College in North Carolina, to fill two vacancies on the Fed’s board.
If confirmed, Cook would be the first Black woman on the Fed’s board in its 108-year history; Jefferson would be the fourth Black man on the board. Jefferson was endorsed unanimously last month by the Senate Banking Committee.
Cook has drawn nearly unified opposition from Senate Republicans, who argue that she doesn’t have sufficient experience researching interest rate policy. They have also expressed concern she isn’t dedicated to fighting inflation. During an earlier procedural vote in the Senate that was 50-49 in her favor, Cook needed every Democratic senator’s vote.
Sen. Sherrod Brown, the Ohio Democrat who leads the Senate Banking Committee, sought Tuesday to delay a procedural vote on Cook’s nomination because two Democrats had tested positive for COVID and weren’t be able to vote. Republicans objected, forcing the vote to proceed. The vote is likely to fail, which means Senate Democrats will have to try to confirm Cook later when all their members are healthy.
Cook, who has a doctorate in economics from the University of California, Berkeley, was a staff economist on the White House Council of Economic Advisers from 2011 to 2012. She was also an adviser to Biden’s transition team on the Fed and bank regulatory policy.
Brown angrily criticized Republicans on the Banking Committee for their opposition to Cook.
“Republicans in my committee have a consistent record voting against Black women,” Brown said, citing their near-unanimous opposition to the nominations of Sandra Thompson to direct the agency that regulates mortgage giants Fannie Mae and Freddie Mac, and to Biden’s Supreme Court nominee, Ketanji Brown Jackson. “They should be ashamed of themselves.”
If confirmed, Cook and Jefferson aren’t likely to alter the Fed’s policymaking in the coming months, economists say, though they will help balance the hawkish views that now dominate the board. Fed governors often defer to the chair and are much less likely to cast dissenting votes at Fed meetings, in contrast to some of the regional bank presidents.
“Even the most dovish current members (of the Fed) are recognizing that inflation is so visibly too high, it’s a tax on households, it has to be dealt with,” said Ellen Gaske, lead economist at asset manager PGIM.
The financial markets expect the Fed to keep raising rates to a range of 2.5% to 2.75% by the end of this year. That would represent a significant increase from its current level of 0.25% to 0.5%.
Many economists think the Fed will raise its benchmark short-term interest rate by a sharp half-percentage point at each of its next three meetings, in May, June and July, to try to rein in accelerating price increases.
Such rate hikes would be larger than the Fed’s typical quarter-point increases and would likely lead to higher borrowing costs for home mortgages, auto loans and credit cards. Those higher costs could, in turn, slow consumer spending and and weaken the overall economy.
Brainard was an architect of a Fed policy framework, adopted in August 2020, under which it said it would no longer raise rates solely because the unemployment rate had fallen to a low level that could spur inflation. Instead, the Fed said it would await actual evidence that prices are accelerating.
That framework has been blamed by some critics for contributing to the Fed’s delay in raising rates as high inflation erupted last year — an assertion disputed by Powell.
Brainard has also said the Fed could more directly take account of climate change in bank supervision, a stance that has drawn opposition from many Senate Republicans.
By CHRISTOPHER RUGABER
