On the campaign trail, candidate Trump often derided the Federal Reserve System for its easy money policy, and its former and current chairmen Ben Bernanke and Janet Yellen for their politicization of the agency. As President, Trump has made it his mission to shake up DC’s bureaucracy with a number of strong conservative appointments, such as Neil Gorsuch for the Supreme Court and Betsy DeVos for Secretary of the Department of Education. So is Trump’s nomination of Jerome Powell for Fed Chairman another curveball thrown at the Swamp?
It seems the general consensus among analysts is that Powell is a pragmatist known to throw politics and ideology to the wayside when policymaking. His background includes experience in the private sector as a lawyer and investment banker, which may be a huge attraction to Trump and his business-like approach to tackling policy. Powell is also a Republican who served in the George H.W. Bush administration as Assistant Secretary of the Treasury and later as Undersecretary of the Treasury. He was most recently a visiting scholar at the Bipartisan Policy Center and was appointed by former President Obama in 2012 to serve as a Fed governor.
However, those seeking a reversal of Bernanke and Yellen’s policies have expressed concern that Powell was initially appointed by President Obama, and never opposed Yellen as a Fed governor – which means that he also opposed Audit the Fed legislation. Hunter Lewis, a harsher critic, has said that “Powell can be relied on to oppose any reform of the Federal Reserve or any reconsideration of the Bernanke system, despite the dismal record of the U.S. economy since the Crash.”
But now that Powell would be the head of the Fed and would thus have more freedom to express his true policy beliefs, would he go the direction of Yellen, as most in the media have concluded? Or would he pave his own path?
Most unusual about Powell’s nomination is that he is not an economist. He does, however, come off as a policy nerd and more of a “listener” than a talker to his acquaintances. His best trait seems to be that he is, as his Fed colleague Jeremy Stein has called him, “remarkably undogmatic.” Knowing this, Powell’s educational experience at a bipartisan think tank and as editor-in-chief of the Georgetown Law Journal makes perfect sense.
It also makes sense that Trump would want someone weary of regulations to head the Fed, which Powell seems to be. A known critic of the Volcker Rule, Powell has suggested that it is time to reconsider “redundant” regulations that place an “unnecessary burden” on the financial industry.
Yet even as he is known to hold these positions, a Democratic economist told the Washington Post that he is “intelligent and not an ideologue.” Moreover, as the Fed prepares to come down from its quantitative easing high, the hope may be that this nonpolitical approach to monetary policy would spur the Fed to reduce its role in the financial system.
President Trump has also appointed lawyer Randal Quarles as the first Fed Vice Chairman to oversee regulatory matters. Trump may get to name four more Fed Governors if Janet Yellen resigns her Governor appointment before it expires.