Who's in the running for remaining Fed openings

December 5, 2021 9:00 PM

WASHINGTON — President Biden ended the guessing game last month over his choice to run the Federal Reserve Board when he announced the renomination of Chair Jerome Powell to another term leading the central bank.

But Powell’s reappointment along with the nomination of Gov. Lael Brainard to one of two vice chair positions only provided some clarity about the leadership of the Fed. The administration still has to name three additional picks to the Fed’s board of governors, including the pivotal vice chair for supervision.

The White House has signaled that the additional nominations could come soon.

"The President intends to make those appointments beginning in early December, and is committed to improving the diversity in the Board’s composition," according to a White House statement released when Powell's nomination was announced.

Gov. Randal Quarles’ term as vice chair for supervision — effectively the Fed’s top bank regulatory position — ended recently and he plans to leave the board at the end of December. Meanwhile Vice Chair Richard Clarida’s term expires at the end of January, and an additional board seat has been vacant since before Biden took office.

The Wall Street Journal recently reported that former Consumer Financial Protection Bureau Director Richard Cordray was among the candidates for Fed vice chair for supervision. Bloomberg News later reported that Federal Reserve Bank of Atlanta President Raphael Bostic and Duke University law professor Sarah Bloom Raskin are also under consideration.

Here is a look at the candidates for open seats on the Fed board.

Sarah Bloom Raskin

Sarah Bloom Raskin, a former deputy Treasury secretary in the Obama administration and a Fed governor from 2010 to 2014, has been mentioned as a candidate to succeed Quarles as vice chair of supervision.

An expert in financial regulation and monetary policy, Raskin — who is married to Rep. Jamie Raskin, D-Md. — also would help the White House fulfill its pledge to promote diversity at the Fed.

Both Sen. Elizabeth Warren, D-Mass., and Senate Banking Committee Chairman Sherrod Brown, D-Ohio, hold sway with the Fed pick, and Raskin is a candidate they can coalesce around, sources said.

In October, Raskin joined the faculty of Duke University’s School of Law as the Colin W. Brown Distinguished Professor, and in January she will become faculty director of the law school’s Global Financial Markets Center, leading some to think she could be off the job market.

Yet some Fed watchers also think the White House may not be inclined to pick Raskin given that she reportedly turned down a job offer in May to lead the Office of the Comptroller of the Currency, according to The Wall Street Journal.

Raskin previously served as Maryland’s commissioner of financial regulation from 2007 to 2010 during the height of the Great Recession. She has a track record on macro-regulation and financial stability, and could hit the ground running on all the major issues facing the Fed including stress testing, the Volcker Rule, cyber breaches and climate risk.

Raphael Bostic

Raphael Bostic, the president and CEO of the Federal Reserve Bank of Atlanta, recently wrapped up a series of conferences on racism and the economy in conjunction with other Federal Reserve banks.

Bostic appears to be a longshot for a Fed opening after telling Bloomberg TV in late November that he has not been contacted by the White House for any of the Fed positions. He had been mentioned previously as a potential White House pick for comptroller of the currency.

“It’s true that I don’t have any trips to Washington on my calendar, so I don’t have to worry about that,” he said on Nov. 22.

Bostic, who has expertise on the Community Reinvestment Act, told Bloomberg that whoever ultimately takes the role of vice chair of supervision needs to understand structural barriers that impact employment and economic growth.

“The important thing is that whoever is in that role understands that capital markets and financial markets have had these challenges and barriers in the past, and is sensitive to look out for them in terms of how we executive our regulatory policy and how banks go about their practices moving forward,” Bostic said in the interview. “The sensitivity and the awareness is something that will be important for the next person who holds that position to have.”

An economist and academic, Bostic spent 16 years at the University of Southern California, where he served as a chair in the Sol Price School of Public Policy and in several roles at the Lusk Center for Real Estate.

Bostic served as a senior policy advisor in the Department of Housing and Urban Development, from 2009 to 2012 and as a senior economist at the Federal Reserve Board from 1995 to 2001.

Lisa Cook

Lisa Cook, a professor of economics and international relations at Michigan State University, has been floated as one of President Biden’s top choices for a seat on the Fed.

Senate Banking Committee Chairman Sherrod Brown, D-Ohio, has said she is his top pick for a vacant Fed seat. If chosen, Cook would become the first Black woman to serve on the Fed board.

Cook served on the Biden-Harris transition team as the deputy team lead for the Federal Reserve, Banking and Securities Regulators Agency Review Team, but she has zero experience in the banking industry making her a longshot to succeed Quarles as vice chair of supervision.

Cook previously was on the faculty of Harvard University’s Kennedy School of Government and had been a national fellow at Stanford University. She has written extensively about the intersection of race, gender and economics and is known for her research on the harm to the economy caused by racism.

Cook wrote a piece last year on distributing stimulus checks to low-wage workers, in which she focused on how to get money as quickly as possible to the unbanked and underbanked populations.

She is a member of the Council on Foreign Relations and is on the steering committee at the Center for Equitable Growth, a progressive Washington-based think tank that counts several of President Biden’s top economists among its alumni.

She also serves on the academic advisory council of the Federal Reserve Bank of Chicago.

Richard Cordray

Richard Cordray, a senior official in the Department of Education and the former head of the Consumer Financial Protection Bureau, has emerged as a dark-horse candidate for the job of vice chair of supervision.

Cordray currently oversees the federal government’s $1.6 trillion student loan program and is a former Ohio attorney general, state legislator and five-time Jeopardy! champion.

The Wall Street Journal reported that Cordray is in the running to serve as the Fed’s top banking regulator. Senate Banking Committee Chairman Sherrod Brown, D-Ohio, said Cordray was under consideration.

Cordray likely has the support of Sen. Elizabeth Warren, D-Mass., the architect of the CFPB, but his lack of experience in prudential bank supervision could be an obstacle.

Some Fed watchers suggest Cordray would be an odd fit for the job. But others think Cordray would relish rolling back many of the Trump-era changes made by Quarles such as simplifying banks’ stress-testing regime and tailoring certain big-bank requirements.

Banks certainly would bristle if Cordray were chosen for a Fed seat given that he was a thorn in their side during the financial crisis, collecting nearly $12 billion in settlements during his tenure at the CFPB from 2012 to 2017.

It also is unclear what Cordray’s views would be on a range of Fed issues. He might consider tackling long-delayed projects such as reforming the Community Reinvestment Act and a bank merger framework that remains uncompleted.

Still, a Cordray pick may be problematic for Biden given his pledge to promote diversity at the Fed.

Karen Dynan

Karen Dynan, a Harvard University economics professor, was the chief economist at the Treasury Department during the Obama administration.

She also previously worked as a Fed staffer, working on among other things the central bank’s response to the financial crisis.

She was a senior economist with the White House Council of Economic Advisers during the George W. Bush administration. Dynan’s research interests are macroeconomic policy, consumer behavior and household finances.

William Spriggs

Williams Spriggs is the chief economist at the AFL-CIO and a professor at Howard University.

Last year, he wrote an open letter to other economists asking whether the national protests over racial equity following the killing of George Floyd was a “teachable moment” for the economics field.

“Modern economics has a deep and painful set of roots that too few economists acknowledge,” Spriggs wrote.

“The fact that a discipline that prides itself on being objective and looking for data to test hypotheses fails to see how negative attributes do not correlate with being African American is a constant irritant for Black economists,” he said in the letter. “Hopefully, this moment will cause economists to reflect and rethink how we study racial disparities.”

Former President Barack Obama appointed Spriggs to be assistant secretary for the Office of Policy at the Department of Labor, a position held from 2009 to 2012.

Valerie Wilson

Valerie Wilson directs the Program on Race, Ethnicity, and the Economy at the Economic Policy Institute.

Her work examines economic inequality, including the income and wealth gap as well as disparities in access to higher education.

She was previously vice president of research at the National Urban League Washington Bureau.