Our frame is uncomplicated for thinking through the determinants that might sway President Biden’s decisions to remake the Federal Reserve Board. The moment is huge in all dimensions and the consequences possibly bigger because there will be precious little easy work for the Fed for a few years.
We turn to the president and a former Board practitioner for the skeletal clues of our frame. Coming home from Ireland, the president said his slate would be announced “fairly quickly” (into its second week), and that he has “a lot of good choices” provided by his economic team and senior staff. Another part of our frame was constructed by esteemed former Vice Chair Roger Ferguson, Jr. To no surprise (and hopefully no credible alarm), he stressed the importance of Biden nominating a Board that reflects the diversity of America. Fortunately, part of this country’s greatness is the plethora of highly qualified people able and ready to serve – that is not an issue for legitimate discussion.
Our suggestions lack everything the White House staff and Treasury Secretary Janet Yellen have in spades: deep training and practice in this field, endless conversations with highly informed confidants, plenty of personal experience working with qualified candidates, and acute knowledge of what makes these potential policymakers tick. Throwing caution to the dot-plot wind we emphasize these names are a few of dozens that would fit our frame. As such what they bring to the table, literally, could be thought of as proxy CVs – again, in our humble, under-informed view.
All Board appointments end on January 31. Existing members could be placed into one of the three seats we count as openly available (that of Richard Clarida, Randal Quarles, and the one currently vacant seat). We begin with our months-old speculation that Chairman Jerome Powell will remain the leader until the end of his governor’s term (January 31, 2026). Of course, if Biden is not the president in 2025, a new president could choose to make a change. Powell, if renominated and confirmed, might decide to change the picture sooner. Governor Lael Brainard’s term runs through 2026 and she could be put into a seat with longer tenure. Powell, Brainard, Michelle Bowman, and Christopher Waller hold four of the seven seats, leaving three seats for the president to fill.
The president might surprise the world by seeking to restructure the Supreme Court although we are in the camp with those guessing he will not. However, he cannot avoid and likely relishes putting an appropriate stamp on the Federal Reserve Board. Despite anticipated hyperbole asserting that Biden is attempting to “stack” the Board, 14-year terms (for most) and intellectual integrity leave such jaw-flapping wanting.
Given the Burns and McChesney lessons, presidents, their advisors, and markets realize nominees generally can be judged on ability, comportment, and the weight of their votes. But even with those parameters presumably well understood, no one can predict the circumstances that force most of these folks to earn their pay and prestige, which almost invariably lead to surprises – possibly even by the smart folks advising and maybe even the president.
*Disclaimer: Drs. Blanco and Spriggs are the only people on our list we have not met in person. Moreover, our overall list should not be viewed as a complete tally of possible candidates. We offer them in response to many readers’ requests for our take. These names should be taken as a subset that we have commented on mainly because of our better familiarity with them than others that might be under consideration.
