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Federal Reserve Governor Lael Brainard attends a “Fed Listens” event at the Federal Reserve headquarters in Washington.
Democratic presidential nominee Joe Biden is likely to make history by appointing the first woman Treasury secretary, if he wins next month’s election, experts said.
With Biden leading in the polls, talk is picking up on who might be on his short-list for top jobs, especially Treasury secretary and Federal Reserve chairman. Sen. Elizabeth Warren and Fed Gov. Lael Brainard are already on the speculative short-list.
For now, there is a tug-of-war between progressive and moderate Democratic camps about the economic jobs.
Jon Leiber, managing director for the U.S. for Eurasia Group, thinks the moderate camp will win, at least the top jobs.
“The top jobs, Treasury, State and Defense departments will go to moderates, not progressives,” Leiber said.
The progressive camps will have to be satisfied with lower ranking appointments, he added.
Kim Wallace, who served at the Obama Treasury and is now a consultant for Federal Budget IQ, thinks that the moderate-versus-progressive story is overblown.
“There will be plenty of people available to Biden that would allow him to satisfy the desires, if not the demands, of dominant wings of the party,” Wallace said in an interview.
For economists, the immediate focus is on the Treasury secretary slot.
Some on the left hope that Sen. Elizabeth Warren, Democrat of Massachusetts, will take the Treasury spot. Warren, who once declared herself a “capitalist to my bones,” has been outspoken about toughening regulations and accountability on Wall Street, especially in the wake of the financial crisis more than a decade ago.
But some analysts believe that Warren will stay in the Senate.
“With the Senate projected to be close to a 50-50 split, Warren could effectively hold veto power over any nominations,” said analysts at Beacon Policy Advisors, in a policy note.
Wallace said he would be surprised if Warren left the Senate. He sees signs that Warren and Biden have grown close.
“More people end up having better, fuller and mutually beneficial relations with Biden by speaking with him than by fighting him,” Wallace said.
And it looks like Warren already “has an open line” with the former vice president, he added.
The leading candidate from the “moderate” camp is Brainard, the last Obama nominee remaining on the central bank’s seven-member board.
Brainard had been touted as a potential Treasury secretary if Hillary Clinton would have won in 2016. She was Treasury undersecretary for international affairs under Obama.
She has spent the four years of the Trump administration leading a rearguard action against Republican deregulation to protect the tough rules on the banks put in place in the wake of the financial crisis.
Brainard “is considered very similar in terms of ideology to [former Bill Clinton Treasury secretary] Larry Summers, who is known to be advising Biden on economic issues,” Beacon analysts said.
Progressives, who don’t hold Summers in high regard, are putting forward alternative choices.
Their leading candidate is perhaps former Fed Gov. Sarah Bloom Raskin, who served at the Obama Treasury in addition to the central bank. Raskin was a state bank regulator in Maryland and is married to a leading progressive member of the House, Rep. Jamie Raskin.
She was by far the Obama administration’s most progressive economic nominee and shares many of the same views as Warren with respect to reforming banking and businesses, Beacon said.
Fed Chairman Jerome Powell’s term doesn’t expire until early February 2022. Fed officials purposely set the expiration of his chairmanship so it doesn’t coincide with presidential election years.
Fed watchers think that Biden has a deep bench from which to select the next Fed chairman.
Powell, who has been harshly criticized by Trump, may seek a second term.
And there are several regional Fed presidents who would create historic firsts at the Fed.
“The presidents’ ranks at the Fed offer a stronger bench than we have seen in the past,” said Wallace.
Two officials often mentioned are Atlanta Fed President Raphael Bostic, who would be the first Black Fed chair, and San Francisco Fed President Mary Daly, who was a high-school dropout who rose to lead a regional bank. They would be ground-breaking in another sense as they are both openly gay.
For the top White House economic post — National Economic Council director — Biden may tap Jared Bernstein, who was his chief economist. Bernstein has been at the Center on Budget and Policy Priorities since leaving the White House. With a doctorate in economics, Bernstein might also move to the Fed.
