Republicans take cheap shots at Fed nominees

Republicans are apoplectic over President Biden’s proposed historical diversity at the Federal Reserve; of his three new nominees, two are Blacks, two are women.

If confirmed, Lisa Cook, a Michigan State economist, and Philip Jefferson, an economist, vice president and dean at Davidson College, would be only the fourth and fifth Black governors in the Fed’s 107-year history. Cook would be the first Black woman and — if confirmed along with the third nominee, former Fed governor Sarah Bloom Raskin — would comprise the first ever majority female board.

Republicans, however, are attacking the two women nominees as unfit. Sen. GOP leader Mitch McConnell (R-Ky.) charged that Raskin wanted to “financially bully the private sector.” Former top Trump adviser Peter Navarro suggested Cook was a “purely race-based appointment” who is “more qualified to coach an NFL team.”

Pennsylvania Sen. Pat Toomey, the ranking Republican on the Banking Committee, “said [Raskin and Cook] … would threaten the independence of the Fed.”

I think these criticisms are some mixture of political grandstanding, hypocrisy and race politics.

Alan Blinder, a former Vice Chair of the Fed and a Princeton economist, told me the Federal Reserve would be enriched by these qualified appointees and the diversity they would bring: “They are capable, come from different backgrounds, and none of them have wacky views.”

Based on research he has done and his own experience, Blinder notes “there is significant evidence in various disciplines that diversity is an asset. When people come in with different ways of thinking, different backgrounds, the evidence is that works better than a completely homogenous group.”

The Biden nominees are three accomplished economists. Jefferson, who thus far has escaped the Republicans’ fire, was a staff economist at the Federal Reserve and was president of the National Economic Association.

Raskin was a Fed governor for three years and then deputy treasury secretary. For both posts, she was confirmed on voice vote.

“She brings a wealth of experience in banking regulation and an overall impressive record; she is great,” says Blinder.

Raskin now is being assailed for her forceful views on banking regulation and climate change. On the former, it’s a safe bet that McConnell is responding to complaints from campaign contributors.

Raskin no doubt considers climate change an existential global threat. So do prominent business leaders and others, including Gen. Mark Milley, chairman of the Joint Chiefs of Staff.

Clearly, it’s beneficial for the Federal Reserve to have members with knowledge and passion about a serious long term economic threat. But the Fed’s involvement or influence on this issue is extremely limited. Raskin’s being nominated to be a vice chair of the Fed, not head of the Environmental Protection Agency.

Since the early days of the board of governors, there was a mandate for diversity — representing financial, agricultural, industrial and commercial interests.

In Cook’s case, her economic research has focused on international economics and on economic inequities that affect minorities and women. All recent Federal Reserve chairmen have worried about the perils of economic inequality, so it’s a good idea to have a governor with a special interest and expertise.

Cook has advised foreign governments on banking policy and was a senior staffer on the Council of Economic Advisers, where she won high marks. In an interview with the Wall Street Journal, Judith Hellerstein, an economist at the University of Maryland who was a colleague of Cook’s at the CEA, noted that work can be high pressured and involve multiple constituencies: “Lisa was wonderful about navigating all of that,” which “will translate beautifully into her work at the Fed.” 

That’s a quality absent in Navarro, who made the race-based charge against her nomination. Read his unhinged reaction when subpoenaed by the Jan. 6 committee on what his role — if any — might have been in trying to sabotage the 2020 election results.

The most serious critic, supposedly, was Sen. Toomey, who charged that these two women were partisan radicals with little experience in the monetary matters central to the Federal Reserve.

Toomey’s history suggests these criticisms are not be taken seriously. 

Three years ago, Toomey supported Fed nominee, Stephen Moore. (Before Toomey was a Senator, he succeeded Moore as president of the conservative Club for Growth.) Moore, after Trump nominated him, acknowledged he knew little about how the Fed worked (and perhaps monetary policy itself); he was a right-wing partisan zealot beset with personal controversies. His nomination was so discredited, the White House had to pull it.

I’d suggest to Sen. Toomey that Cook is — in every way — eminently more qualified.

Over the past 40 years, the Federal Reserve has been led by five exceptionally able and quite different chairs. They led a mainly white male board; the current chairman, Jay Powell, has shown an appreciation that times have changed.

As the Fed faces crucial decisions, I am confident these three nominees will work well with Chairman Powell, the other members of the seven-person board, and regional bank presidents. The Senate should confirm Jefferson, Raskin and Cook — promptly.

Al Hunt is the former executive editor of Bloomberg News. He previously served as reporter, bureau chief and Washington editor for The Wall Street Journal. For almost a quarter century he wrote a column on politics for The Wall Street Journal, then The International New York Times and Bloomberg View. He hosts Politics War Room with James Carville. Follow him on Twitter @AlHuntDC.