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**NOVEMBER 8, 2021**

Kuttner on TAP

Biden's Appointments to the Fed: The Endgame

How the resignation of Powell's ally Randy Quarles shifts the odds to
Powell's reappointment

President Biden met separately Thursday with Fed Chair Jerome Powell and
the leading alternative candidate to succeed him, Fed governor Lael
Brainard. A surprising development today, of which more in a moment,
increases the odds that Powell will be reappointed.

The case for reappointing Powell is that he is a Republican who happens
to be excellent on giving priority to full employment and gives Biden a
lot of protection from pressure from inflation hawks. At his press
conference

last week, Powell deftly displayed how he finesses these minefields.

The case against Powell is that he has been bad on financial regulation,
has been slipshod on ignoring conflict-of-interest rules in cases of his
own investments, and that replacing him would give Biden a rare majority
of progressive Democrats on the board of our central bank.

That last calculus has just changed. This morning, Fed governor Randy
Quarles announced that he will leave the Fed by year-end.

Quarles, a Republican whose presidential designation as Fed vice chair
for supervision expired at the end of October, had been keeping his
options open as to whether he'd remain as a governor of the Fed, a
term that continues through 2032.

With Quarles out, this sets off a domino effect, in which Biden will be
able to name a majority of Fed governors even if he keeps Powell as
chair. So Quarles's move increases the odds that Biden will keep
Powell.

Powell and Quarles are close. You wonder if Powell persuaded his friend
Quarles to throw himself under the bus to save Powell's own job. It
would not take much persuading. As just another governor, rather than
the powerful vice chair for supervision, Quarles would have a much less
attractive post. He can make a lot more money on Wall Street. What was
crucial for Powell, however, was Quarles's timing-before Biden made
his decision.

Biden's new appointments to the Fed are expected to be a package.
Besides Brainard, who will either succeed Powell or become a Fed vice
chair, others prominently mentioned are former Fed governor Sarah Bloom
Raskin and Michigan State economist Lisa Cook.

There is still a case for replacing Powell. Financial markets and
financial writers are putting on a lot of pressure for rate hikes.
Brainard as chair would be stronger at resisting that, as well as
tougher on financial regulation. But the odds have now shifted to
Powell.

~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

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

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What's Next for the Infrastructure Program

The battle shifts to implementation, where success will be won or lost.
BY DAVID DAYEN

Manchin Could Score Carbon Capture Subsidies to Prop Up Coal

In September, Joe Manchin was told carbon capture would need heavy
federal subsidies to keep coal running in West Virginia. Now, a
supercharged tax credit is in Build Back Better. BY LEE HARRIS

Why the Strikes, and What Might They Lead To?

The Great Recession is long gone, but some employers insist that their
employees work under recession-era constraints. BY HAROLD MEYERSON

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