View this email in your browser

**OCTOBER 8, 2021**

Kuttner on TAP

Powell's Reappointment Looks Shakier

Fed Chair Jay Powell's campaign to be reappointed is looking like less
of a sure thing. His main rival for the job, Fed Governor Lael Brainard,
is starting to look like the less risky choice.

The explosion of stock-trading scandals by two Fed regional bank
presidents, Robert Kaplan and Eric Rosengren, resulted in their early
retirement. Then, last Friday, Bloomberg News disclosed that Fed Vice
Chair Richard Clarida had also made securities trades
,
on the very eve of a Fed announcement of how it would be supporting the
pandemic economy, in February 2020.

There are now two separate investigations under way-by the SEC and the
Fed's own inspector general-and the Justice Department may launch
its own inquiry.

For Powell, who may well be innocent of personal wrongdoing, the problem
is twofold. First, the White House wanted to get this decision made by
now, but they obviously can't act until the results of the
investigations are known, which could take months.

The other problem is appearances. In a scandal-free Biden
administration, it looks like Powell presided over a culture at the Fed
that was lax on insider trading.

As the inflation rate keeps ticking upward, a separate problem is that
Biden doesn't want the Fed pressured to tighten money prematurely.
Powell has been good on this so far. The only Fed governor even more
reliable on monetary policy is Lael Brainard.

Brainard led on the creation of a new Fed framework for monetary policy

that created more latitude on keeping credit cheap and plentiful for the
sake of full employment-an implicit rebuke to former Fed Chair Janet
Yellen for keeping money too tight for too long. My sources say there is
little love lost between Yellen and Brainard.

Yellen has been one of Powell's key promoters inside the
administration. Even Yellen, however, has lately been saying, publicly
anyway, that Biden has not made up his mind.

Powell also looks like a problem since Elizabeth Warren has gone public
with her case against his regulatory laxity. Again, the contrast is with
Brainard, who has championed tighter bank regulation, as documented in
this New York Times

piece by Peter Coy.

The widely touted benefits of reappointing Powell, a Republican who has
helped the recovery with friendly monetary policy, are rapidly being
overtaken by the costs.

~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

Robert Kuttner's latest book is
The Stakes: 2020 and the Survival of American Democracy
.

[link removed]

Start Governing and Good Things Happen

The Education Department's changes to the Public Service Loan
Forgiveness program can serve as a powerful lesson. BY DAVID DAYEN

How Biden Can Take On the Climate Crisis by Himself

He has a number of important executive actions at his disposal to
reduce greenhouse gas emissions. BY DOROTHY SLATER & ZENA WOLF

Altercation: What Takes the Place of Local News Ain't News

Right-wing propaganda that looks like local papers is flooding
America's towns. BY ERIC ALTERMAN

To receive this newsletter directly in your inbox, click here to
subscribe. 

 

[link removed]

 

[link removed]

 

[link removed]

 

[link removed]

 

[link removed]

YOUR TAX DEDUCTIBLE DONATION SUPPORTS INDEPENDENT JOURNALISM

The American Prospect
IDEAS, POLITICS & POWER
The American Prospect, Inc.
1225 I Street NW, Suite 600
Washington, DC xxxxxx
United States
Copyright (C) 2021 The American Prospect. All rights reserved.

To opt out of American Prospect membership messaging, click here
.

To manage your newsletter preferences, click here
.

To unsubscribe from all American Prospect emails, including newsletters,
click here .
_________________

Sent to [email protected]

Unsubscribe:
[link removed]

The American Prospect, Inc., 1225 I Street NW, Suite 600, Washington, DC xxxxxx, United States