Powell as Top Fed Pick Reflects Senate Politics, Ferguson Says

(Bloomberg) -- The market assigning a higher probability to Federal Reserve Chairman Jerome Powell getting a second term reflects the politics of the Senate and which candidate President Joe Biden thinks is more likely to get approval from lawmakers, economist and former Fed Vice Chairman Roger Ferguson said. 

“The Senate is, as you know, evenly divided -- it’s going to be important to get Republicans and moderate Democrats to vote for whoever the president seeks to nominate,” Ferguson said Wednesday in an interview on Bloomberg Television’s “Balance of Power” with David Westin Wednesday. “I’m sure he must be thinking about the politics of who of these candidates is more likely to get more relatively easily through the Senate.”

Read more: Brainard Interviewed by Biden for Fed Chair as Search Heats Up

Biden has a number of vacancies to fill at the U.S. central bank with Governor Randal Quarles stepping down at the end of December, Vice Chair Richard Clarida’s term as a governor expiring at the end of January, and Powell’s tenure at the helm ending in February.  

Fed Governor Lael Brainard was interviewed for the top job at the U.S. central bank when she visited the White House last week, according to people familiar with the discussions, signaling that Powell has a serious rival as Biden considers who will lead the Fed for the next four years.

Massachusetts Democrat Elizabeth Warren is the only senator to voice opposition to Powell’s reappointment. No senators have publicly backed Brainard, though some liberal groups are campaigning for her. She would likely draw nearly unanimous opposition from Republican senators, while Powell would likely draw a bipartisan consensus. 

If he chose Brainard, Biden would be nominating someone who would excite Democrats in Congress but put Republicans and large banks on edge -- setting up a tougher confirmation battle in the Senate, where Democrats command only 50 of the 100 seats. Still, Vice President Kamala Harris would be able to cast a tie-breaking vote.

Ferguson -- most recently the chief executive officer of TIAA and a vice chair at the Federal Reserve from 1999 to 2006 -- is among the people in a Bloomberg survey of economists identified as a potential pick as the new chair. In the October survey, a second term for Powell was seen as most likely. Brainard and Atlanta Fed President Raphael Bostic were seen as the other possible contenders. Either Ferguson or Bostic would be the first Black person to serve in the position.

Read more: Warren, Powell’s Biggest Foe, Not Letting Up on Ethics Push

Last month, Apollo Global Management Inc. named Ferguson as vice chairman to help originate new deals and deepen relationships across the financial industry and with regulators. He will also help Apollo expand in retirement services, as well as work on strategic asset-management initiatives, the company said in an Oct. 18 statement. 

©2021 Bloomberg L.P.