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Biden announces three more Federal Reserve nominees

Former Treasury official Sarah Bloom Raskin and economists Lisa Cook and Philip Jefferson are the three nominees Biden announced for the Fed board on Friday.

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Updated January 14, 2022 at 9:44 AM ET

President Joe Biden announced three additional nominees for the Federal Reserve Board on Friday, rounding out the central bank's governing body as it prepares to tackle the highest inflation in nearly four decades.

Biden is tapping former Fed governor Sarah Bloom Raskin to serve as Vice Chair for Supervision — a key regulatory role. In addition, Biden nominated academic economists Lisa Cook and Philip Jefferson to fill the remaining vacancies on the Fed's seven-member governing board.

"This group will bring much needed expertise, judgement and leadership to the Federal Reserve while at the same time bringing a diversity of thought and perspective never seen before on the Board of Governors," the president said in a statement.

If confirmed, Cook and Jefferson would be two of only five African American Fed governors in the central bank's 108-year history, and the first since 2006.

Biden had already nominated Fed Chairman Jerome Powell to serve a second term and promoted Fed governor Lael Brainard to serve as Vice Chairman. The Senate Banking Committee held hearings on those nominations this week.

The new appointments come at a sensitive time for the central bank, which is under growing pressure to address rising prices. Annual inflation hit 7% in December, marking the sharpest jump in consumer prices since 1982.

Raskin is a former financial regulator from Maryland, who served an earlier stint on the Fed board during the Obama administration. She left that post to take a job with the Treasury Department. Raskin is married to Rep. Jamie Raskin, D-Md., who led the second impeachment of President Donald Trump.

Sarah Bloom Raskin has been outspoken in arguing that bank regulators should consider the financial risks posed by climate change. Senate Republicans challenged that viewpoint this week during confirmation hearings for Powell and Brainard.

Cook is a professor at Michigan State University who served as a senior economist during the Obama administration. Her academic research has explored areas such as innovation by African Americans and the negative effect on Black patents after lynchings and other attacks.

Jefferson is a former Fed economist who is now a professor and administrator at Davidson College. He has written extensively about poverty.

A source familiar with the nominees said they are committed to fighting inflation while ensuring that economic growth benefits all workers.

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Transcript :

ARI SHAPIRO, HOST:

Today, President Biden announced three more picks to help steer the Federal Reserve through what could be a turbulent time for the U.S. economy. The president says his nominees for the Fed's governing board would bring expertise, judgment and, quote, never-before-seen diversity to the central bank. If confirmed, they'll help lead the Fed as it confronts the highest inflation in almost 40 years.

NPR's Scott Horsley is following the story. And Scott, let's start with Biden's nominee for a key regulatory role at the Fed - Sarah Bloom Raskin. Who is she?

SCOTT HORSLEY, BYLINE: Raskin is a veteran financial regulator. She has already served an earlier stint on the Fed board during the Obama administration. She also worked at the Treasury Department. She's married to Congressman Jamie Raskin. He's the Maryland Democrat who led the second impeachment effort against former President Trump.

Now, Biden has tapped Sarah Bloom Raskin to be vice chair for supervision, which is a powerful post that sets the tone for bank regulation. And she's been outspoken in saying that regulators should take into account the financial risks posed by climate change. Environmentalists like that, but it could make her a lightning rod for Senate Republicans like Pat Toomey of Pennsylvania who think climate change is none of the Fed's business.

(SOUNDBITE OF ARCHIVED RECORDING)

PAT TOOMEY: Not only does the Fed lack expertise in environmental matters, but there's no reason to believe that global warming poses a systemic risk to the financial system. We haven't found a single bank that's failed in the modern era due to a severe weather event.

HORSLEY: The Fed is actually already working to make sure banks understand and manage their climate risks. But Fed officials insist they're not going to start telling banks, for example, you can't lend money to fossil fuel companies.

SHAPIRO: President Biden also tapped two academic economists for the remaining vacancies on the board. Tell us about them.

HORSLEY: Yeah, Lisa Cook is an economist at Michigan State University who also worked in the Obama White House. Philip Jefferson's a former Fed economist who's now at Davidson College. Both Cook and Jefferson are Black, and if confirmed, they would be two of only five African Americans who've ever served on the Fed Board in its 108-year history.

Cook would be the first Black woman. Some of her academic research looks at innovation by African Americans. She spoke back in 2020 with NPR's Planet Money about how lynchings and episodes like the Tulsa Race Massacre a century ago discourage Black inventiveness and how that comes at a cost for everybody.

LISA COOK: If there is something that impedes the rate of arrival of ideas, you're going to slow down the economy. It's not just for that period. And it's not just for Black people. This is a cautionary tale for all economies.

SHAPIRO: Now, President Biden says he wants more diversity of thought and perspective on the Fed board. What is the track record there?

HORSLEY: There's a ways to go. New Jersey Senator Robert Menendez complained this week there's never been a Latino governor on the Fed board. And the leadership of the 12 regional Fed banks is also overwhelmingly white.

David Wessel at the Brookings Institution has also been looking at the staff of the Fed, which employs close to 900 Ph.D. economists. Of those, only about a quarter are women, and only 11% are Black, Latino or multiracial. Now, that racial makeup is roughly in line with the share of Ph.D. economists coming out of universities in recent years, but it's obviously well below the share of the general population.

SHAPIRO: If these nominees are confirmed, they'll have a seat at the table where the Fed sets interest rates. What's that likely to - what's likely to happen there in the next year?

HORSLEY: The Fed has telegraphed pretty clearly that interest rates are going to be going up soon in an effort to get control of inflation, which is the highest it's been since 1982. We could see the first interest rate hike as early as March, and forecasters think there will be two or more additional rate hikes by the end of the year.

We're already seeing some increase in consumer borrowing cost in anticipation of that. The average cost of a 30-year fixed mortgage for example hit 3.45% this week. That's the highest since the beginning of the pandemic. Although, credit is still pretty cheap by historical standards.

SHAPIRO: NPR's Scott Horsley, thanks a lot.

HORSLEY: You're welcome.

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