3 Democratic Senators to Vote Against Jerome Powell If Biden Reappoints Him as Fed Chair

Three Democratic senators said publicly that they would vote against the nomination of Jerome Powell if President Joe Biden selected him for a second term as chair of the Federal Reserve, the Associated Press reported.

Two of the senators, Rhode Island's Sheldon Whitehouse and Oregon's Jeff Merkley, announced their stance Friday, citing concerns over his commitment to combat climate change.

In a joint statement, Whitehouse and Merkley wrote that Powell "refuses to recognize climate change as an urgent and systemic economic threat," first by ignoring the issue and then saying that climate change was more so an issue to be addressed by other government agencies.

They warned against the ongoing "economic fallout" of climate change as temperatures and sea levels rise, drought becomes more common and increasingly frequent natural disasters destroy "homes, roads and bridges, and other physical and financial assets."

"Price stability, the safety and soundness of our financial system, and millions of jobs and businesses—all of which are squarely in the Fed's mandate—are at stake," the senators wrote in the statement.

Whitehouse and Merkley called on Biden to appoint a Fed leader who "will ensure the Fed is fulfilling its mandate to safeguard our financial system and shares the Administration's view that fighting climate change is the responsibility of every policymaker," adding that "that person is not Jerome Powell."

Senator Elizabeth Warren of Massachusetts has also expressed opposition to Powell's re-nomination. She described him as "a dangerous man" to have as the Fed's chair because of his backing for the easing of some bank regulations, AP reported.

For more reporting from the Associated Press, see below.

Senators Against Powell Nomination
Three Democratic senators said publicly that they would vote against the nomination of Jerome Powell if President Joe Biden selected him for a second term as chair of the Federal Reserve. Above, Powell testifies during a House Financial Services Committee hearing on September 30, 2021, on Capitol Hill in Washington, D.C. Sarah Silbiger/Pool via AP

Powell is a former private equity executive who was elevated to the Fed chairmanship by President Donald Trump and whose term expires in early February.

Powell has broad support among Senate Republicans, however, and if nominated would likely receive bipartisan backing. He was approved as Fed chair in early 2018 by an 84-13 vote, with 39 Democrats voting in favor, including Whitehouse. Merkley voted no, as did Vice President Kamala Harris, then a senator from California.

Brainard is seen as slightly more dovish than Powell, meaning she generally supports keeping interest rates low to support more hiring. With inflation running at three-decade highs, her nomination would likely rely more on Democratic support.

On Tuesday, Biden said he would announce a decision within several days.

Whitehouse and Merkley did not say whom they would prefer instead of Powell. Brainard, a favorite of many progressives, has expressed more willingness than Powell to use the Fed's tools, principally its supervision of banks, to address global warming.

Climate change is a tricky issue for the Fed, because the central bank has already come under criticism from Republicans in Congress for the limited steps that Powell has taken on the issue. He has set up two committees to analyze the impact of rising temperatures on the financial system and last December the Fed joined an international group of central banks and financial regulators that are monitoring the impact of climate change on banks.

Environmentalists warn that extreme weather, worsened by global warming, will increasingly create major losses for banks and insurance companies. Bank loans to commercial and residential properties near the coasts are at risk from rising ocean levels and other climate impacts, potentially threatening banks' financial health, the groups say.

And lending to oil and gas companies carries additional risk as the world transitions to clean energy, environmentalists add. That suggests that banks should be more cautious before making loans to drilling and other companies in the energy sector.

Such concerns have raised objections from conservatives, however, that the Fed could respond by taking steps to discourage bank loans to such companies.

Powell said at a press conference earlier this month that "we do think we have a role in climate change."

But when it came to issues such as regulating what industries banks could lend to, Powell said, "that's not a decision for bank regulators or for any agency. That's a decision for elected representatives."

In a speech last month, Brainard said the Fed will likely provide guidance to the banks that it supervises on how they can better assess the risks that climate change poses to their loan portfolios, though she did not provide a timeline.

"Climate change," she said, "is projected to have profound effects on the economy and the financial system, and it is already inflicting damage."

Whitehouse, Merkley Against Powell Nomination
Two Democratic senators, Rhode Island’s Sheldon Whitehouse and Oregon’s Jeff Merkley, announced Friday that they would vote against Federal Reserve chair Jerome Powell if he was nominated for a second term. Above, Whitehouse attends a Senate Judiciary Committee hearing to examine Texas's abortion law on Capitol Hill on September 29, 2021, in Washington, D.C. Tom Williams/Pool/Getty Images