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

US Federal Reserve Board member Lyle Brainard delivered a speech after being nominated by US President Joe Biden to serve as Vice Chairman of the Federal Reserve in the Southern Court Auditorium of the Eisenhower Executive Office Building of the White House in Washington, USA on November 22, 2021.

Kevin Lamarck | Reuters

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 changing the Volcker Rule, a milestone clause 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”.

Because Brainard is the only Democrat on the Fed’s board of directors, her objections — 12 times in 2020 alone — are 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 the Fed chairman itself.Biden selected chairman Jerome Powell on Monday Lead the Fed for re-election.

The work of the vice chairman of the Federal Reserve affects the setting of interest rates, the balance of 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 still more work to be done, in the past 10 months, we have made significant progress in getting Americans back to work and getting our economy to work again. This success proves the economics I pursue The agenda and the decisive Fed’s actions under the leadership of Chairman Powell and Dr. Brainard have helped us survive the worst recession in modern American history and set us on the path to recovery,” said President Joe Biden in a statement. Said in the prepared statement.

He added: “As I said before, we cannot return to the pre-pandemic state.” “They are as convinced as I are that urgent action is needed to deal with the economic risks of climate change, and to stay ahead of our financial system. New risks.”

A Fed spokesperson declined to allow Brainard to be interviewed.

Progressive push

Biden Monday Announced the intention to nominate the 59-year-old Brainard will serve 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, it was thought that Brainard was considering assuming the top position. However, Republican Powell won high praise from leaders of both parties for the Fed’s action to inject large amounts of cash into the economy in 2020, because businesses across the country have closed due to Covid-19.

Economists say that near-zero interest rates and the Fed’s monthly purchases of $120 billion in Treasury bonds and mortgage securities have saved the U.S. economy from a more severe recession and are the main reason for the faster-than-expected rebound.

Before the announcement on Monday, Wall Street speculated that Brainard might also be appointed as the Fed’s vice chairman of supervision, that is, the central bank official responsible for supervising banks. The White House said on Monday that the president will announce candidates for the post sometime in December.

“Although Brainard missed the top position this time, she was nominated as Vice Chairman of Monetary Policy instead of Vice Chairman of Supervision and Supervision, because broader speculation made her the core of future Fed policymaking and positioned her as a potential The future chairman of the Federal Reserve or the Secretary of the Treasury,” said Krishna Guha, director of central bank strategy at Evercore ISI.

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

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

Throughout the summer and fall, Warren encouraged Biden to find a Fed chairman who was tougher on the banks. And stay away from Powell, who she calls a “dangerous man.” Others, including Whitehouse and Merkley, are pushing for a candidate Believes that climate change is a serious threat It will also restructure 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 Tell Harvard Undergraduates in February Although the Department of Labor’s overall unemployment rate is a useful indicator, looking at it in isolation often masks inequality. Rather, she said, she believes that the broad-based and inclusive maximum employment is “a key guide for monetary policy.”

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.

PNC Chief Economist Gus Faucher said in an email: “If Powell is not re-nominated, Brainard is the obvious choice for Biden.” “The differences between Powell and Brainard on monetary policy are small, but Bray Nader’s handling of the banking industry is generally stricter than Powell’s. Brainard’s appointment as vice chairman instead of supervisory vice chairman is a bit unexpected.”

Sherrod Brown, the chairman of the Senate Banking Committee and Ohio Democrat, quickly expressed his appreciation for Biden’s decision to promote Brainard. His committee is expected to recommend Powell and Brainard to the wider Senate, and legislators are expected to substantially confirm these two appointments.

“Dr. Lael Brainard has been fighting for a stronger and fairer economy all his life-in an economy where workers share in the growth and prosperity they create, and their hard work will not be gambled by reckless Wall Street banks,” he Said in a press release.

The committee’s top Republican Senator Pat Tumi praised the president’s decision to re-nominate Powell and stated in a press release that although he has some concerns about Brainard’s tendency to strengthen banking supervision, he Looking forward to meeting with her to discuss these issues.

CNBC politics

Read more CNBC’s political coverage:

For a long time, the Fed has always 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 this power is given Narrow task: 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, as speculation about who Biden might appoint as his secretary of the treasury raged, some progressives believed that Brainard was too gentle about this role.

Jeff Hauser, executive director of the revolving door project File 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, while Brainard’s colleagues 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 Safir | Reuters

Brainard also The case for advancing 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 earned a doctorate. Obtained 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 planned to nominate her to the Federal Reserve Board of Directors. 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 including 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 as the Biden administration extended the decision time for its nominee, some people believe that Brainard’s confirmation rate has declined among Republicans.

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.

Her history of supporting lower interest rates at the risk of fueling inflation – albeit to promote employment – may no longer be popular in economies where consumer prices are rising. Rising at the fastest rate since 1990.

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