A group of progressive Democrats in the U.S. House of Representatives is urging President Joe Biden to select a new person to lead the Federal Reserve instead of reappointing the current chair, Jerome Powell, early next year.

What You Need To Know

  • Democratic Reps. Alexandria Ocasio-Cortez, D-N.Y., Rashida Tlaib, D-Mich., Ayanna Pressley, D-Ohio, Mondaire Jones, D-N.Y. and Jesús G. “Chuy” García, D-Ill. are asking President Joe Biden to replace Jerome Powell as chair of the Federal Reserve

  • Powell’s stint as head of the nation’s central banking system began in 2018, and his four-year term expires in Feb. 2022

  • In a letter released Tuesday, the group of House Democrats argued Powell has taken “very little action to mitigate the risk climate change poses to our financial system”

  • The group also expressed concern that Powell has “substantially weakened many of the reforms enacted in the wake of the Great Recession"

Powell’s stint as head of the nation’s central banking system began in 2018, and his four-year term expires in Feb. 2022. Biden may reportedly release his nomination for the position as early as this week, and his pick will have to clear the Senate to be approved.

In a statement released Tuesday, Democratic Reps. Alexandria Ocasio-Cortez, D-N.Y., Rashida Tlaib, D-Mich., Ayanna Pressley, D-Ohio, Mondaire Jones, D-N.Y. and Jesús G. “Chuy” García, D-Ill., encouraged the president to “re-imagine a Federal Reserve focused on eliminating climate risk and advancing racial and economic justice.”

The letter went on to say while the Federal Reserve’s new monetary policy framework has elicited “positive changes” in pushing the nation closer to full employment, Powell himself took “very little action to mitigate the risk climate change poses to our financial system.”   

The group pointed to the United States’ low ranking in this year’s Green Central Banking Scorecard Report published by Positive Money, a nonprofit advocacy group that evaluates the environmental impact of monetary policy, as evidence that the country is falling behind at the intersection of finance and environment. 

Out of all G-20 countries assessed, the U.S. tied with South Korea for 13th place based on four categories: Research and advocacy, monetary policy, financial policy and leading by example. 

Essentially, Positive Money found the United States has implemented no monetary policy that would benefit the environment, the least impactful of which would include “mandatory disclosure of climate-related risks for companies eligible in asset purchase schemes,” with excluding all fossil fuel assets from collateral frameworks as a bigger tool to combat climate change. 

“At a time when the Intergovernmental Panel on Climate Change is warning of the potential catastrophic and irreversible damage inflicted by a changing climate, we need a leader at the helm that will take bold and decisive action to eliminate climate risk,” the group of House Democrats wrote of Powell in Tuesday’s letter. 

The group also expressed concern that Powell has “substantially weakened many of the reforms enacted in the wake of the Great Recession,” in part by changing the Volcker Rule, which prevents banks from using taxpayer-insured deposits to make risky trades or investments on Wall Street. The rule was enacted in the wake of the 2008 financial crisis.

Powell twice eased the rule’s restrictions, first by offering more exemptions to short-term trading holdings, and a subsequent change allowing banks to invest more of their assets into high-risk trades and/or hedge funds.  

“Weakening financial regulations that were specifically created to prevent such a disaster from happening again, risks the livelihoods of Americans across the country,” lawmakers wrote. “To move forward with a whole of government approach that eliminates climate risk while making our financial system safer, we need a Chair who is committed to these objectives.”

A number of other Democrats, from both the House and the Senate, have voiced concerns about Powell’s continuing tenure. 

But it remains unclear who Biden would choose, if anyone, to replace Powell, who has seen the country through the devastating COVID-19 pandemic. Tuesday’s letter from progressives offered no concrete alternative, and an ultra-liberal pick would likely face an uphill battle in the evenly-divided Senate.

Several lawmakers, including Sen. Elizabeth Warren, D-Mass., have praised Federal Reserve governor Lael Brainard’s approach to financial regulation. Some have even floated Brainard as a possible replacement for Powell. 

When asked Wednesday if President Joe Biden has met with either Powell or Brainard in recent weeks, White House press secretary Jen Psaki said: “I have no meetings to report to you or read out for you.”