Lael Brainard may take White House post

Biden could ask Federal Reserve vice-chair to lead economic council, reports say
Lael Brainard
Lael Brainard

US president Joe Biden is considering Federal Reserve vice-chair Lael Brainard for a White House economic post, according to reports in several news outlets.

The Washington Post first reported on January 25 that Brainard was the leading candidate to chair the National Economic Council. The report named other potential candidates, including deputy Treasury secretary Wally Adeyemo, and Sylvia Mathews Burwell, health and human services secretary from 2014 to 2017.

The current NEC chair, Brian Deese, is expected to depart the position soon, although reports do not name a date. It is common for White House staff to schedule resignations after the midterm elections held in November.

The Federal Reserve Board had not replied to a request for comment before publication.

President Barack Obama appointed Brainard to the Federal Reserve Board, and she took office as one of the seven governors in June 2014. In May 2022, she took office as vice-chair for a four-year term, on Biden’s nomination.

While on the board, she has publicly dissented several times from other board members on regulatory policy. In October 2019, she objected to new standards that she said would weaken and narrow oversight over speculative proprietary trading.

Brainard was an undersecretary of the Treasury in the Obama administration between 2009 and 2013. For a time, she was the only Democrat on the Federal Reserve Board. She earned a PhD in economics at Harvard University, and taught at the Massachusetts Institute of Technology.

When Biden was first assembling his cabinet, observers speculated that Brainard might become Treasury secretary. The president eventually nominated former Fed chair Janet Yellen for that role.

Some Democrats saw Brainard as a candidate for Fed chair herself ahead of the expiration of Jerome Powell’s first term in February 2022. Biden chose to nominate Powell for a second term, and picked Brainard as vice-chair, replacing Richard Clarida.

Dean Baker, senior economist and co-founder of the Center for Economic and Policy Research, a progressive think-tank in Washington, DC, tells Central Banking that Brainard “may want a change of scenery after being at the Fed for close to a decade”.

Baker says that Brainard might want a chance “to deal with a wider range of issues”. He also notes that Brainard could escape public anger “in the event the Fed blows it, and pushes us into a recession”.

Baker says that the council’s influence varied according to who was leading it “and their relationship with the president”. He notes that previous NEC directors Robert Rubin and Lawrence Summers were very influential.

“I’m sure that if Brainard takes the slot she will have assurances that she will really be at the centre of policy debates at the [White House],” says Baker.

The NEC is an advisory body on economic issues attached to the executive office of the president. It also monitors economic policy-making. The president chairs the council, whose members are mainly cabinet secretaries and cabinet-level officials.

Former directors Rubin and Summers were also both US Treasury secretaries. Deese is a lawyer by training, and was deputy director of the Office of Management and Budget between 2013 and 2014.

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