Powell\'s Predictability Garners Bipartisan Support

 Andrew Soergel
  25th-Jan-2018

The day after the government emerged from a short-lived shutdown sparked by Republicans' and Democrats' inability to agree on much of anything, incoming Federal Reserve Chairman Jerome Powell attracted a surprising show of bipartisan support as the Senate gave the green light to his confirmation.

By a vote of 84-13, Powell was approved to succeed outgoing Chair Janet Yellen, who had been confirmed under former President Barack Obama in 2014.

That a nominee of President Donald Trump attracted the support of Democratic Sens. Chuck Schumer of New York, Sherrod Brown of Ohio and 38 of their caucus colleagues is notable, as his margin of approval fell among the largest a prominent Trump pick has garnered from a deeply divided U.S. Senate.

"His track record over the past six years shows he is a thoughtful policymaker," Brown, the top Democrat on the Senate banking committee, said Tuesday on the chamber floor, calling Powell's newly confirmed post "one of the most important jobs in our government."

Powell's resume was highlighted by several Democrats as a selling point. Nominated to serve on the Fed's Board of Governors by President Barack Obama after holding a Treasury post under President George H.W. Bush, Powell in recent years has consistently voted with Yellen on monetary policy matters and is expected to continue the Fed's ongoing, slow-but-steady approach to raising interest rates and shrinking its balance sheet.

Yet his smooth passage through the Senate on Tuesday could just as easily have proved contentious. Powell will be the first Fed head in decades that is not an economist by trade – he holds a law degree from Georgetown University and worked in legal, investing and banking capacities during his time in the private sector.

Trump's decision to select Powell also represents the first time a new president has declined to renominate a Fed chair selected by one of his predecessors since President Jimmy Carter snubbed former Chairman Arthur Burns in the 1970s by tapping G. William Miller.

"Janet Yellen has been one of the most successful Fed chairs in history and she deserved to be renominated – just as every prior Fed chair has been renominated, regardless of party, since 1979," Sen. Elizabeth Warren, D-Mass., said in a statement in November after Trump nominated Powell.

Warren was one of nine members of the Democratic caucus, along with Sen. Bernie Sanders, I-Vt., who voted against Powell's nomination.

Some Republican lawmakers who have taken issue with how the Fed conducts its business and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which expanded the Fed's powers – including GOP Sens. Rand Paul of Kentucky and Ted Cruz of Texas – also joined the ranks of those against Powell's selection.

But in some ways, the new chairman's wide margin of victory represents a return to pre-recession normalcy for Fed nominees that have historically drawn bipartisan support. In fact, Paul Volcker's 1983 confirmation by a vote of 84-16 marked the most "no" votes ever recorded to that point for a chairman nominee.

Votes have been tighter in the aftermath of the Great Recession, however, after the Fed took unprecedented action by lowering its benchmark interest rate to never-before-seen levels and buying up trillions of dollars in government bonds in a bid to soften the U.S. economy's landing. The Fed's intervention was deeply polarizing, and subsequent confirmation votes reflected that.

Ben Bernanke, the man in charge of the Fed when the recession struck, was first confirmed by a voice vote back in 2006, with former Sen. Jim Bunning, R-Ky., representing the only dissenter.

Just four years later, Bernanke was confirmed by a much narrower margin – 70 to 30, which to this day stands as the largest number of "no" votes a Fed chair has received since the central bank was founded in 1913. Yellen cleared the Senate by a narrower 56-26 margin in 2014, but winter weather reportedly kept more than a dozen lawmakers from casting a vote on Capitol Hill that day.

Powell's passage was likely aided by his ability to offer what few Trump nominees to this point have been able to bring to the table: perks for Republicans and Democrats. GOP lawmakers have been encouraged by his openness to adjusting certain private sector regulations and perhaps tweaking aspects of Dodd-Frank legislation that granted the Fed a stronger hand in the private sector.

And Democrats were drawn to his habit of voting hand in hand with Yellen. Indeed, lawmakers on both sides of the aisle have praised Powell for offering a degree of predictability as they work with an administration that over the past year has in many ways proved anything but.

"He's kind of one of these 'no surprises' kind of guys, and right now, we think that's pretty important," Sen. Mike Rounds, R-S.D., told CNBC in an interview last week. "At this point, I think he's a well-known commodity. I think people feel very comfortable with him. They like the stability on the [Fed Board of Governors]."

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