Elizabeth Warren, the progressive Democratic senator from Massachusetts, said Tuesday she would oppose the reappointment of Jay Powell as chairman of the Federal Reserve and call him a “dangerous man” to lead the US Federal Reserve.
Warren’s opposition to a second term for Powell is hampering his hopes of staying at the helm of the Fed, as it will make it harder for President Joe Biden to rename him without facing a setback from the Democrats’ left. to stare. party.
Powell’s current term ends in February 2022 and Biden will have to make a decision soon.
Warren has long been a critic of Powell’s position on bank regulation, which she deserves as the reason he earns more time as Fed chief.
‘I came to Washington after the accident in 2008 to make sure something like this would never happen again. “Your record gives me serious concern,” Warren told Powell during a Senate banking committee.
‘You have always acted to make our banking system less secure. “And that makes you a dangerous man to be at the head of the Fed, and therefore I will oppose your renaming,” she said.
Warren highlights several cases where the Fed has relaxed financial regulations, including the central bank’s decision to change liquidity requirements for certain Wall Street institutions.
She also indicated earlier this year the inflation of Archegos Capital, which caused banks to suffer as large gift industries exploded through the family office.
Powell said the Fed learned its lessons from the episode.
Although Warren is now publicly opposed to Powell’s offer for a second term with the Fed, a number of moderate Democrats support him for another four years in office, on the grounds that it will ensure stability in monetary policy at some point. of major economic upheaval to the pandemic.
Even some progressive Democrats have encouraged Powell’s approach to monetary policy, given the more tolerant approach to inflationary hikes and the pursuit of full-time jobs compared to previous Fed leaders.
Warren’s comments come on the heels of a revolution in leadership at the Fed, with two senior officials resigning Monday after investigating their trading activities at a time when the Fed was aggressively intervening in financial markets last year to protect against a broader crisis in the early days of the pandemic.
Robert Kaplan, president of the Dallas Fed and Eric Rosengren, Boston, were active investors, with sometimes significant positions in certain shares and funds of the company.
Earlier this month, Powell announced a comprehensive review of the central bank’s ethical guidelines regarding the participation of senior officials in financial markets, and on Tuesday supported the tightening of the rules.
He added that the occurrence of a conflict of interest was “obviously unacceptable”, and that the Fed was taking a closer look at the Rosengren and Kaplan trade to make sure it complied with current guidelines and the law.