Federal Reserve Chair nominee Jerome Powell, who goes by “Jay,” is no Washington outsider. In fact, he was born and raised in the District and its Maryland suburbs and has served in both the Treasury and the Fed. President Donald Trump on Thursday announced Powell is his pick to lead the central bank, replacing Janet Yellen.
How did he get here?
Powell, 64, a Republican, is a member of the Fed’s board of governors. He received his bachelor’s degree in politics from Princeton and a law degree from Georgetown, and then moved to New York, where he worked as a lawyer and then an investment banker at Dillon, Read & Co.
He made his first foray into government in 1990, when he became undersecretary of Treasury for finance under President George H.W. Bush, overseeing policy on financial institutions and the federal debt market.
From 1997 to 2005, he was a partner at private equity firm Carlyle Group. Next, he moved to the Bipartisan Policy Center, a centrist think tank, where he helped moderate the congressional debate over the debt ceiling in 2011.
After being nominated by President Barack Obama, he joined the Fed’s board in 2012. He has been the central bank’s point man on regulation since April.
So, he’s not an economist?
Nope. He’ll be the first Fed chair since Paul Volcker to not have a PhD in economics. But Powell is kind of a throwback: Before Alan Greenspan came along, it was more common for Fed chairs not to be economists. Powell would also be the first investment banker to lead the central bank.
An investment banker? So, is he rich?
Yes, particularly when compared with recent Fed chairs, who — as we’ve discussed — have been academic economists. Powell has a net worth of at least $21 million, though the actual number could be much higher, according to his financial disclosures.
He has been on the Fed board for five years. Has he disagreed a lot with Yellen?
Powell has not dissented from any of the board’s decisions made under either former Chair Ben Bernanke or Yellen. The Fed is an organization built around consensus, so fellow board members almost never dissent from the chair.
OK, then why didn’t Trump just renominate Yellen?
A few reasons. Yellen – a Democrat who was appointed Fed chair by Obama — faces a lot of opposition from conservatives in the Senate, which would make it a much rougher confirmation fight. Powell wasn’t necessarily the first choice of Republicans, but he’s much more palatable to them because he’s seen as more willing to ease some of the complex bank regulations that were rolled out after the 2008 financial crisis. Trump has also said he wants to make his own mark on the central bank.
Others have pointed out that Powell looks like he’s out of “central casting” for a Fed chair, which is always a plus for this president.
Are his views on monetary policy different from Yellen’s?
It’s not clear yet. As we said, he voted with Yellen on all of her previous interest rate decisions (she kept interest rates near zero until recently and has been hiking rates only gradually in the past year). He might not be as inclined to keep interest rates low, but he’s unlikely to take a drastically different approach. But that will also depend on how the economy behaves for the next four years.
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