Who is Lyle Brainard?What you should know about Biden’s candidate for the Fed’s vice chairman

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On Tuesday, September 5, 2017, Federal Reserve (Fed/FED) President Lael Brainard listened at an event sponsored by the New York Economic Club.

Mark Koozlaric | Bloomberg | Getty Images

Lael Brainard is usually an outlier.

As one of the seven Fed governors, she has developed a habit of opposing other unanimous motions to withdraw financial supervision. Prior to her first objection in 2018, no governor had objected since 2011.

Except for the few objections she raises every year, only three of her colleagues have raised objections in recent years.

One of Brainard’s most recent objections was in June 2020, when the Federal Reserve was considering revising the Volcker Rule, a milestone in the Dodd-Frank Act in the financial crisis that restricted banks and private equity firms and hedge funds. Transactions.

Brainard cast the only vote against changing the rules. She warned that these proposals could weaken core protection measures and allow banks to “return to the risky activities that emerged during the 2008 financial crisis”.

As the only Democrat on the Fed’s board of directors, Brainard’s objections — 12 times in 2020 alone — were ignored.

But now someone is listening. His name is Joe Biden.

The President has chosen Brainard to serve as the Fed’s vice chairman, one of the most powerful economic positions in the world, and perhaps the obvious heir to the role of Fed chairman. Biden chose Jerome Powell on Monday to lead the Fed’s re-election.

The Fed’s vice chairman’s job has a say in how interest rates are set, the balance between employment and inflation, and the direction of supervision of the largest U.S. banks such as JPMorgan Chase, Bank of America, and Wells Fargo.

“Although there is more work to be done, we have made significant progress in getting Americans back to work and getting our economy to work again in the past 10 months. This success is a testament to the economic agenda I am pursuing. And the decisive Fed’s actions under the leadership of Chairman Powell and Dr. Brainard helped us weather the worst recession in modern American history and set us on the road to recovery,” President Joe Biden said in a preparation Said in the good statement.

“As I said before, we can’t just return to the pre-pandemic state. We need to make our economy recover better. I believe Chairman Powell and Dr. Brainard are focused on maintaining low inflation, stable prices, and providing full employment. It will make our economy stronger than ever before,” he added. They are as convinced as I am that urgent action is needed to deal with the economic risks brought about by climate change and to stay ahead of the new risks in our financial system. “

A Fed spokesperson declined to allow Brainard to be interviewed.

Progressive push

Biden announced on Monday that he intends to nominate the 59-year-old Brainard as Powell’s deputy to help manage the U.S. economy through soaring inflation, a stable but uneven recovery, and a sluggish labor force participation rate.

In the days before the White House announced the news, Brainard himself was considered to be considering holding the top position. But Republican Powell won the high praise of leaders of both parties because of the Fed’s action in 2020 to inject a large amount of cash into the economy, because Covid-19 caused the closure of businesses across the country.

Economists say that near-zero interest rates and the Federal Reserve’s monthly purchases of $120 billion in Treasury bonds and mortgage securities have saved the U.S. economy from falling into a more severe recession, which is also the reason for the faster-than-expected rebound.

The government’s decision to promote Brainard to vice chairman is partly due to progressive lobbying and Democrats such as Elizabeth Warren in Massachusetts, Shelton Whitehouse in Rhode Island and Jeff Merkley in Oregon.

Senator Elizabeth Warren (D-MA) asked Treasury Secretary Janet Yellen and Fed Chair Powell at the Senate Banking, Housing and Urban Affairs Committee hearing on the CARES bill, which was held in the Hart Senate in Washington, DC The office building is held, September 28, 2021.

Kevin Deitch | Reuters

Throughout the summer and fall, Warren encouraged Biden to find a Fed chairman who was tougher on the bank and stay away from Powell. She called it a “dangerous man.” Others, such as Whitehouse and Merkley, have pushed for a candidate who sees climate change as a serious threat and will redefine the way banks consider their risks.

Brainard has delivered speeches in recent months on topics such as climate change and the race-based economic disparities that have intensified the Covid-19 pandemic.

She told Harvard undergraduates in February that while the Department of Labor’s overall unemployment rate is a useful indicator, looking at it in isolation often masks inequality. Instead, she stated that she believes that the broad-based and inclusive maximum employment is “a key guide for monetary policy.”

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Some people think that such speeches are not too subtle and try to distinguish themselves from Powell. Powell has been reluctant to extend the Fed’s jurisdiction to topics that may be regarded as partisan topics.

Although it was created by Congress and its leader has been confirmed by the Senate, the Fed has long attached great importance to its political independence.

Board members serve a 14-year term, partly to isolate them from the day-to-day wishes of elected officials. But the scope of this power is very narrow: use monetary policy to maximize employment, stabilize prices, and ease long-term interest rates.

Brainard has not always attracted the progressives of the Democratic Party.

Just 12 months ago, there was speculation about who Biden might appoint as his secretary of the treasury, and some progressives believed that Brainard was too gentle about this role.

Jeff Hauser, executive director of the Revolving Door Project, filed a lawsuit against Brainard in a blog post on October 15, 2020.

He and his colleagues wrote: “We need a Treasury secretary to overcome the obsession with budget deficits of Bill Clinton and the early Democratic technocrats in the Obama era, and Brainard’s peers and Robert Rubin and Tim Gay This is exactly what Turner and other colleagues showed.”

“Brainard has proven that she will not deal with climate issues at the Fed. As Treasury Secretary, how can we trust her to do this?” they added. The revolving door project is part of the Center for Economics and Policy Research, a left-leaning think tank.

Fed Chairman Jerome Powell poses with Fed Governor Lyle Brainard (left) at the Federal Reserve Bank of Chicago in Chicago, Illinois, U.S., June 4, 2019.

Ann Sapphire | Reuters

Brainard also promoted the development of the digital dollar and is regarded as the main voice of the Fed’s financial innovation. She said at the spring meeting that cryptocurrencies backed by the central bank can more easily serve nearly one-fifth of Americans who are considered “insufficient bank deposits.”

“The Federal Reserve remains committed to ensuring that the public has access to safe, reliable and reliable payment methods, including cash,” she said at a conference held by Coindesk in May. “As part of this commitment, we must explore-and try to predict-to what extent households and businesses’ needs and preferences may migrate further to digital payments over time.”

Academic and political ancestry

Brainard is no stranger to the Federal Reserve and has been serving on its main governing body (the board of directors) since 2014. If confirmed by a majority of the seats in the Senate, Brainard will serve as vice chairman for four years after the current vice chairman Richard Clarida resigns and expires next year.

Her life and career are marked by international relations.

Brainard was born in Hamburg, Germany, was a diplomat, and grew up in East Germany and Poland during the Cold War. Her education eventually received a PhD in economics from Harvard University in 1989.

Her research focuses on the relationship between international trade policy and employment. In the 1990s, she worked in the National Economic Council of the Clinton administration, when she served as one of the president’s chief advisers to the Group of Eight.

After the George W. Bush administration, Brainard rejoined the US government in 2009 as the Deputy Secretary of International Affairs of the Treasury Department, which made her the highest-ranking woman in the history of the department. As the chief diplomat of the Treasury Department, she represented the interests of the United States throughout the global financial and European debt crises.

She resigned from the Treasury Department in 2013, because former President Barack Obama’s plan to nominate her to the Federal Reserve Board became apparent. She began her 14-year tenure at the Central Bank in June 2014.

During most of her time at the Fed, her quiet ambition and data-oriented work made her loved by Republican colleagues like Powell. These qualities also make her a regular candidate for the country’s highest economic position, because it is attractive to senators on both sides of the aisle.

But with the decision of the Biden administration to extend its nominee, some people believe that Brainard’s confirmation rate among Republicans has declined.

It is believed that her recent speeches on climate change and other progressive priorities, as well as a long record of supporting banking supervision, have weakened some of the support of Republicans in the past 10 months.

In an economy where consumer prices are rising at the fastest rate since 1990, her history of supporting lower interest rates may increase inflation—albeit to promote employment—may not be popular anymore.


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