Brainard wins Senate confirmation to be Fed’s vice chair
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.
The relatively close vote reflects the increasingly partisan atmosphere in Congress and nationally that is now engulfing the nomination process for the Fed, an independent institution that has sought to remain above politics. The last time that Brainard, a longtime Democratic official, came before the Senate in 2014, her nomination to the Fed’s Board of Governors was approved 61-31.
In another sign of the divide, a procedural vote on whether to consider Biden’s nomination of Lisa Cook, an economics professor, to a position on the Fed’s board, was voted down Tuesday on partisan lines, delaying a final Senate vote on her nomination.
The delay in considering Cook, who, if confirmed, would become the first Black woman to serve on the Fed’s board, prompted angry recriminations by senators from both parties, including statements suggesting racial bias by Senate Republicans.
“Republicans in my committee have a consistent record voting against Black women,” said Sen. Sherrod Brown, the Ohio Democrat who leads the Senate Banking Committee.
Brown cited Republicans’ overwhelming 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.
Sen. Pat Toomey from Pennsylvania, the senior Republican on the committee, countered that it was “sad and shameful” to suggest “that there is some kind of racial bias against Black women” among Senate Republicans. Toomey noted that Republicans on the committee have voted in favor of five women of color, including Cecilia Rouse, one of Biden’s top economic advisers.
Biden and the Senate have struggled to fill three vacancies on the Fed’s seven-member board just as the central bank is grappling with the delicate challenge of raising interest rates enough to clamp down on inflation — but not so much as to plunge the economy into recession.
Brainard’s 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, 60, 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,” by contrast, generally support higher rates to control inflation.
Three other Fed nominees are also awaiting confirmation for the Fed’s board, including 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.
In addition to Cook, an economics professor at Michigan State University, Biden has nominated Philip Jefferson, an economist and academic dean at Davidson College in North Carolina. If confirmed, 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 lacks sufficient experience in 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.
Brown sought Tuesday to delay a procedural vote on Cook’s nomination because two Democrats had tested positive for COVID and weren’t able to vote. Republicans objected, forcing the vote to proceed. The vote failed, 47-51, which means that Senate Democrats will have to try to confirm Cook later when all their members are healthy.
Cook, who earned 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.
Previously, Biden tapped Sarah Bloom Raskin as his choice to be the Fed’s top bank regulator. Raskin later withdrew from consideration after Republicans and one Democrat, Sen. Joe Manchin of West Virginia, lined up against her. Biden has since nominated Michael Barr, a former Treasury Department official, for that post. Brown said Tuesday that he hoped to hold a hearing on Barr as early as mid-May.
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 PGIM Fixed Income.
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.