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Elizabeth Warren, the progressive Democratic senator from Massachusetts, said on Tuesday that she would oppose the re-appointment of Jay Powell as chairman of the Federal Reserve, calling him a “dangerous man” to head the US central bank.
Warren’s opposition to a second term for Powell is a major blow to his hopes of remaining at the helm of the Fed, as it will be more difficult for President Joe Biden to reappoint him without facing backlash from the left of the Democratic Party. Party.
Powell’s current term ends in February 2022 and Biden will have to make a decision soon.
Warren has long criticized Powell’s stance on banking regulation, which she cited as the reason he didn’t deserve more time as Fed chief.
“I came to Washington after the 2008 crash to make sure nothing like this would ever happen again. Your record is of great concern to me, ”Warren told Powell at a Senate Banking Committee hearing.
“Time and time again you have acted to make our banking system less secure. And that makes you a dangerous man to run the Fed, and that’s why I will oppose your re-appointment, ”she said.
Warren pointed to several instances where the Fed has relaxed financial regulations, including the central bank’s decision to change liquidity requirements for some Wall Street institutions.
She also reported on the explosion of Archegos Capital earlier this year, which saw banks suffer from the implosion of leveraged family office operations.
Powell said the Fed had “learned lessons” from this episode.
Although Warren now publicly opposes Powell’s candidacy for a second Fed term, a number of moderate Democrats are backing him for a new four-year term on the grounds that it would ensure stability in the development of the Fed. monetary policy at a time of great economic upheaval due to the pandemic.
Even some progressive Democrats have applauded Powell’s approach to monetary policy, given his more tolerant approach to inflation increases and stubborn pursuit of full employment compared to previous Fed chiefs.
Warren’s comments follow a leadership shake-up at the Fed, with the resignation of two senior officials on Monday after scrutiny of their business activities at a time when the Fed was aggressively intervening in financial markets last year to protect against a larger crisis in the early days of the pandemic.
Robert Kaplan, chairman of the Dallas Fed, and Eric Rosengren of Boston have proven to be active investors, sometimes with substantial positions in certain stocks and corporate funds.
Earlier this month, Powell announced a full review of the central bank’s ethical guidelines for senior official participation in financial markets and on Tuesday supported a tightening of those rules.
He added that the appearance of a conflict of interest issue is “obviously unacceptable,” and said the Fed is taking a closer look at transactions made by Rosengren and Kaplan to ensure they are within guidelines. in force and the law.
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