Senate Banking Democrats are pushing President Joe Biden to consider diversity in filling an opening on the Federal Reserve Board, with some calling for the White House to nominate the first Latino for the post.
An effort by Sen. Bob Menendez, D-N.J., to pressure the White House to nominate a Latino to the board is picking up steam among his colleagues on the Senate Banking Committee and other Democrats. That push could put a damper on the consideration of Austan Goolsbee, president of the Chicago Fed, as a potential replacement for Lael Brainard as vice chair.
“I see no reason why the administration could not appoint a qualified Latino to the Federal Reserve,” Menendez said. “The second largest minority in the nation, $2 trillion domestic marketplace, younger by a decade than the American population, I think they have insights to share with the Fed.”
When asked if he would withhold support from a nominee who isn’t Latino, Menendez said he’s keeping all options open, adding that he shared a list of qualified candidates with the White House. Sen. Ben Ray Luján, D-N.M., who isn’t a member of the Banking Committee, agreed that Biden should nominate a Latino to fill the vacancy.
“When we look at the buying power of [the] Latino community across America, and especially the number of Hispanics who are impacted, that are fortunate to have pensions and accounts that are impacted by the Fed,” he said. “There’s a qualified number of individuals that have been doing this work and they deserve to be considered.”
Goolsbee, an economic adviser to President Barack Obama, is a leading candidate to replace Brainard as vice chair as she leaves the job to become White House economic policy director, according to The Wall Street Journal. If Goolsbee were nominated and confirmed, the top three positions on the Fed board would be held by white men, including Chairman Jerome Powell and Vice Chair for Supervision Michael Barr.
Sen. Chris Van Hollen, D-Md., another Senate Banking member, offered the most enthusiastic endorsement of Goolsbee, saying he favored more diversity at the Fed, but that Goolsbee was a “very good choice.”
The committee has jurisdiction over Fed nominees.
Biden has already achieved historic diversity on the Fed board. Lisa Cook last year became the first Black woman to join the board. She and Philip Jefferson, another Biden nominee, are the first two Black members to sit on the board at the same time. However, in its 110-year history, the Fed Board has never had a Latino member.
Sen. Jack Reed, D-R.I., who also sits on the Banking Committee, said he agreed with Menendez.
“I think every institution should reflect the diversity of the United States. I’m sure there are many qualified Latino and Latina individuals,” he said. “I think it’s a fair comment. It should be weighed very heavily by the administration.”
Committee member Mark Warner, D-Va., said he likes Goolsbee, but that Menendez has a “valid point.”
“Historically, there’s never been a Latino member of the Fed,” Warner said. “As great as Austan is, I’d like to hear what some of the other candidates might be.”
Meanwhile, other Senate Banking Democrats, including Sens. Catherine Cortez Masto of Nevada, Raphael Warnock of Georgia and Elizabeth Warren of Massachusetts didn’t weigh in on Menendez’s call for a Latino nominee, but said the nominee should reflect the diversity of the U.S.
“I think that representation matters and that all of us benefit when we have people who bring variegated perspectives to the work of governing. And certainly, monetary policy would be part of that,” Warnock said.
Sen. Jon Tester, D-Mont., also a panel member, said he was supportive of Menendez’s push for a Latino, but that in the end it would come down to qualifications.
Dual mandate
Senate Banking Democrats, including Chairman Sherrod Brown of Ohio and Warren, are also pushing for more ideological diversity on the Fed with an emphasis on the labor half of the Fed’s dual mandate to pursue maximum employment and stable prices.
Since the start of 2021, only two Fed votes on monetary policy have had a dissenter, and both were from regional Fed bank presidents: Kansas City Fed President Esther L. George wanted a smaller increase in interest rates in June 2022 than the other members of the Federal Open Market Committee and St. Louis Fed President James Bullard wanted a bigger increase in March 2022.
“Powell favors a little more one part of the mandate,” Brown said, adding that he wants a nominee who also prioritizes employment and wages.
The distinction has taken on greater urgency as inflation starts to cool, and some Democrats fear continued rate hikes by the Fed will tip the economy into a recession that hurts workers.
“I am concerned that the current Fed, led by Chairman Powell, focuses on inflation and thinks that the way to bring it down is to put millions of people out of work,” Warren said. “That’s why it’s so important to get the right person in now. We have a three-three Fed and we need someone who has a deep background fighting on behalf of workers.”
The January Consumer Price Index showed a 6.4 percent annual inflation rate, according to the Bureau of Labor Statistics. The annual rate was down from its peak of 9.1 percent last June, but above the Fed’s 2 percent target.
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