The Biden administration announced Friday morning three nominees for top jobs at the nation’s central bank, naming Sarah Bloom Raskin, Lisa Cook, and Philip Jefferson to fill spots on the Federal Reserve’s Board of Governors.
Raskin has specifically been tapped to steer the Fed’s policies on bank regulations as Fed vice chair of supervision, according to a person familiar with the matter. The Fed vice chair of supervision role is considered one of the nation’s most powerful financial regulatory positions given the Fed’s purview over some of the world’s largest banks.
“We are at a moment of historic economic progress alongside unique economic challenges as we work to drive our recovery forward. This is a moment that calls for sound, independent leadership from the Board of Governors at the Federal Reserve," said Biden in a statement. "That is why I am proud to nominate Sarah Bloom Raskin, Lisa Cook, and Philip Jefferson, who will bring a breadth of knowledge, experience and expertise to the Board of Governors. Raskin is among the most qualified nominees ever for the position of Vice Chair for Supervision, while Jefferson and Cook are talented economists with decades of experience working on a broad range of economic issues."
The slate of nominees will now face vetting from the U.S. Senate, where a 50-50 split could create political drama over some or all of Biden’s picks. If confirmed, the new Fed governors would have strong influence over monetary policy.
In November, Biden renominated Jerome Powell as head of the Federal Reserve and current Fed Governor Lael Brainard to a vice chairman role. Both nominees had their confirmation hearings in the Senate Banking Committee this week.
The stakes for each pick are high: The U.S. economy is still attempting to pull workers back into the labor force but inflationary pressures appear to be impacting broad consumer categories. The Fed also has responsibilities stretching beyond monetary policy; the central bank has the power to regulate and supervise the nation’s largest banks and has a seat at the table in the federal government’s broader approach to cryptocurrency regulation.
"President Biden has nominated a full slate of nominees to the Federal Reserve that are committed to the board’s dual mandate of stable prices and maximum employment and represent a diversity of backgrounds that will bring important new perspectives," said U.S. Treasury Secretary Janet Yellen, in a statement. "We continue to face new challenges as we confront the pandemic and its variants, but we have made remarkable strides to put our economy on strong footing. I am confident these nominees will build on that progress. I also know that these individuals will respect the tradition of an independent Fed, as they work to fight inflation, support a strong labor market and ensure our economic growth benefits all workers.”
Here is a closer look at the picks:
Sarah Bloom Raskin as Fed vice chair of supervision
Raskin’s confirmation would mark a homecoming for the current Duke University professor, who served as a Fed governor from 2010 to 2016. Raskin was also a former deputy secretary at the U.S. Treasury under the Obama administration, where she focused on financial sector resiliency. During the financial crisis, she served as Maryland’s commissioner of financial regulation, overseeing the state’s banks during the recession.
As Fed vice chairman of supervision, Raskin would lead the central bank’s regulatory approach to giant banks like JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo. Since the financial crisis, the Fed has beefed up minimum standards on capital and liquidity held by the largest banks.
But Trump-appointee Randal Quarles, the first person to officially hold the vice chairman of supervision role, took a “tailored” approach to bank capital requirements that loosened requirements on some large super-regional banks (like U.S. Bancorp and PNC Financial Services).
Raskin would have the opportunity to revisit some of these changes.
Lisa Cook as a Fed governor
If confirmed, Lisa Cook would become the first Black woman to become a Fed governor in the central bank’s over 100-year history. Cook, who is a professor of economics at Michigan State University, served on the Biden-Harris Transition team as a lead on bank and securities matters. Her research has looked at the role of patents in economic activity, emphasizing the benefits to GDP growth if public and private policies fostered more innovation from African Americans and women.
“GDP per capita could be 4.4% higher if we had greater participation from African-Americans and women. There are lots of things to fix in the pipeline and in the workplace,” Cook told Yahoo Finance in an interview in June 2020.
The Jerome Powell-led Fed has paid more mind to racial wealth and income gaps as it steers policies, a theme that could come up in Cook’s confirmation hearing.
Philip Jefferson as a Fed governor
Jefferson is an economist currently serving as Davidson College’s vice president for academic affairs and dean of faculty. With a focus on labor markets, Jefferson has taught at Swarthmore College, Columbia University, and the University of Virginia. Jefferson has also worked within the Federal Reserve system, having experience at both the Fed Board and the Federal Reserve Bank of New York.
If confirmed, Jefferson would be the fourth Black man to hold a Fed governor position. His research has looked at economic disparities for African American and female-headed households.
His other research has looked at the impact of easy monetary policy on workers of different skill sets. A 2005 paper suggested that monetary policy should allow labor markets to run tight because unskilled — and often lower-wage — workers tend to benefit from a Fed that holds interest rates low.
“These findings feed into the current deliberations within the Federal Reserve System in favor of those who would not slow the economy too soon,” Jefferson said in a 2018 interview.
A version of this article was originally published on Jan. 13, 2022.
Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.