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Jerome Powell will boost protections to Americans’ savings from the threat of climate change, Biden says

Progressives urged Biden to pick a more climate-focused chair, but he said Trump's Fed pick will make it a "top priority" while bringing "stability." ...
Joe Biden Jerome Powell
U.S. Federal Reserve Chair Jerome Powell listens as President Joe Biden nominates him for a second four-year term in the Eisenhower Executive Office Building’s South Court Auditorium at the White House in Washington, U.S., November 22, 2021.

  • Jerome Powell will make climate risk a "top priority" during his second Fed term, Biden said Monday.
  • Progressives had urged Biden to nominate a chair who prioritized climate change and financial regulation.
  • Powell will bring "stability" to the economy while working to counter climate risk, Biden said.

Federal Reserve Chair Jerome Powell isn't the climate-focused Fed chair progressives were hoping for, but President Joe Biden insists he's still poised to make strides toward protecting the US from environmental disaster. 

Biden nominated Powell to serve a second term as the central bank's chairman on Monday. The choice signals business as usual at the Fed over the next four years, as Wall Street and economists had largely expected Powell's renomination.

It also snubs Democrats hoping for a more left-leaning Fed chair. A group of House progressives including Alexandria Ocasio-Cortez urged Biden in August to nominate a chair with greater focus on climate risk and inequality, while Senate Democrats Elizabeth Warren, Sheldon Whitehouse, and Jeff Merkley said ahead of Biden's announcement they wouldn't vote to confirm Powell, adding they wanted a candidate who would do more to fight climate change and rein in the financial sector.

Biden sought to quell progressives' concerns in a Monday press conference. Powell aims for the Fed to have a "more proactive role" in regulating the financial sector and protecting it from risks, the president said. Addressing climate risks will also be a "top priority" for the Fed chair, Biden said.

"We have to make sure our financial system can withstand climate change and is prepared to transition to clean energy," the president added. "The Fed must be a leader among central banks globally in addressing climate-related financial risks."

The White House has been increasingly vocal in framing the climate crisis as a financial as well as a humanitarian risk. The president signed an executive order in May dedicated to investigating and countering the risk climate change poses to homeowners, businesses, and consumers.

More recently, Biden rolled out a plan that seeks to mitigate climate-related financial risks. Proposals included in the October report aim to protect Americans' retirement, pension, and savings accounts from climate change.

And while progressives have slammed Powell for doing too little to fight climate change, the central bank has taken some action. The Fed created a Supervision Climate Committee in early 2021 to study climate risks in the financial system and help insulate financial institutions from those dangers. Separately, Fed Governor Lael Brainard — nominated by Biden on Monday to serve as vice chair at the Fed — warned in a February speech that climate change is "already imposing substantial economic costs" around the world.

Not the Fed chair progressives want, but maybe the one they need right now?

Biden sought to address progressives' concerns around financial-sector regulation and climate risk, as well as explain why Powell was better for the job than a more left-leaning nominee. Powell was first nominated to the Fed's top job by President Donald Trump in 2017. While he's enjoyed bipartisan praise for the Fed's actions early in the coronavirus crisis, some Democrats called on Biden to appoint a chair more aligned with Democrats' values.

Biden pushed back against the notion on Monday, saying that "broad, bipartisan support" for the Fed is crucial at a time of intense political polarization.

"Why I'm not picking a Democrat? Why am I not picking fresh blood or taking the Fed in a different direction? Put directly, at this moment of both enormous potential and enormous uncertainty for our economy, we need stability and independence at the Federal Reserve," Biden said.

Picking Powell also tees Biden up for an easy win. Several Senate Republicans backed Powell's renomination on Monday, more than making up for the few Democrats withholding their support. Where a Democratic nominee would surely draw fire from the GOP, Powell is all but certainly to be confirmed quickly by the Senate.

Biden's Monday remarks suggest he wants to appease everyone with his selection, from the GOP to the most left-leaning progressives.

Read the original article on Business Insider

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