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**NOVEMBER 22, 2021**

Kuttner on TAP

Powell Stays as Chair-of a Transformed Fed

Progressives will soon be a majority of the central bank's board of
governors.

Biden's carefully considered decision to reappoint Jay Powell to chair
the Fed for four more years, with Lael Brainard elevated to vice chair,
was the safer course. Powell will now be confirmed overwhelmingly, and
Biden will have a Republican Fed chair firmly committed to resisting the
call for a premature hike in interest rates based on a mistaken
diagnosis of what is really supply-shock inflation.

But the progressive community's campaign to have Biden replace Powell
with Brainard will still bear fruit. Biden has three other Fed seats to
fill, and with Powell staying as chair there is now even greater
assurance that he will fill the other slots with progressives, who are
also likely to be women and people of color.

Three leading candidates are former Fed governor (and former deputy
Treasury secretary) Sarah Bloom Raskin to be vice chair for supervision,
Michigan State economist Lisa Cook, and AFL-CIO chief economist and
Howard University professor Bill Spriggs. The latter two are African
American. This lineup would produce the most progressive and diverse
Federal Reserve ever.

It would also leave Powell on the short side of a 4-3 majority of Fed
governors who are far more committed to tough banking supervision and
regulation than he is, as well as an even more solid majority against
needless tightening of monetary policy. For the moment, there is just
one Democrat on the Fed board. There will soon be four.

Normally, the Fed chair runs the place and calls the shots, but not if
he is at risk of being outvoted. In 1987, the Fed was debating whether
to weaken the Glass-Steagall wall between commercial and investment
banking by allowing commercial banks to underwrite several categories of
bonds. The powerful chair, Paul Volcker, was a monetary conservative,
but he knew his history and was opposed to any weakening of
Glass-Steagall.

Volcker lost that battle, in a 3-to-2 vote. A Fed chair cannot function
when he loses control of his board, so Volcker, at just 58, resigned
from the Fed, with six years of his term remaining.

Powell remains as Fed chair for now, but he will be presiding over a
transformed institution.

~ 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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A Look at How Unions Lift Workers

Unions aren't just about strikes and politics-the stories the media
covers. There's a big story the media usually misses about unions:
how, concretely, they improve workers' lives. BY STEVEN
GREENHOUSE

Two Dems Could Sabotage Bank Regulator Who Opposed Their Deregulatory
Agenda

Saule Omarova's past criticism of bank deregulation is a sticking
point for Democrats wary of how aggressively she would regulate big
banks. BY LEE HARRIS

How Democrats Can Break the Vicious Political Cycle

Nominating corporate stand-ins rather than candidates with conviction
makes it difficult to deliver meaningful results when in power. BY
TOBY JAFFE

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