The New Fed is here. Why is it historic?

President Biden has announced all five of his nominations to the Board of Governors of the Federal Reserve System. I spoke with Kaleb Nygaard about their significance.

Finally! President Biden has set forth his vision for the Federal Reserve’s leadership. With its political independence, these nominations are the White House’s only influence, and it’s an important one. Personnel is policy, and he chose a stellar team.

"This group will bring much-needed expertise, judgment and leadership to the Federal Reserve while at the same time bringing a diversity of thought and perspective never before seen on the board of governors,” President Biden said.

• Jay Powell, Chair

• Lael Brainard, Vice-Chair

• Sarah Bloom-Raskin, Vice-Chair of Supervision

• Lisa Cook, Governor

• Philip Jefferson, Governor

If confirmed, they’ll join two current Governors, Michelle Bowman and Chris Waller.

Nearly all the news coverage elevates the diversity of the Biden nominees by gender, race, training, and geography. Here’s one from Victoria Guida:

Victoria Guida @vtg2

President Joe Biden's latest nominations to the Federal Reserve Board mark a major victory for lawmakers and other diversity advocates who have long pushed for new voices at the world's most powerful central bank.

politico.comBiden moves to remake the FedBiden on Friday tapped two Black economists — Lisa Cook and Philip Jefferson — for open seats on the board.

Biden’s appointments are historic and a big step forward toward ‘The New Fed.’ It’s helpful to set historic events in the context of history. So, I sat down with Kaleb Nygaard, a Senior Research Associate at the Yale Program on Financial Stability and a notable expert on the Fed’s history. Enjoy.

Full conversation. Below are shorter clips by topic.

How did you get interested in the Fed’s history?

I would highly recommend Kaleb’s podcast, The Reserve. It’s an accessible and lively introduction to the Fed. He’s also got a fabulous website, Centralverse.

Reviving Growth Keynesianism @RGK_Project

Check out Kaleb's easy-to-use website for learning about central banking here: centralverse.org/FedWatcher and the New Bagehot Project here:

som.yale.eduNew Bagehot ProjectThe Yale Program on Financial Stability (YPFS) was founded in 2013 to focus on the broad topics of systemic risk and macroprudential regulation. In its early years, researchers at the YPFS authored dozens of case studies on these topics, and hosted an annual set of meetings to bring together policym…

Who are Biden’s nominees?

There’s an immense amount of press on all five nominees. Google away. They are all incredibly qualified, good people, true public servants, and their job will be very hard.

What to expect in the role of Vice-Chair of Supervision?

If confirmed, Sarah Bloom-Raskin will be only the second person to hold the position officially. Dan Tarullo performed the role, but never held the title, and Randy Quarles, whose term ended last fall was the first. How the role evolves is a big question.

Josh Zumbrun @JoshZumbrun

More than half a decade after passage of Dodd-Frank, Fed's vice-chair of supervision remains unfilled

Peter Ireland @PIrelandatBC

why no vice chair for supervision? https://t.co/gQZeVe7TB9 https://t.co/W3Jw9Y3OAq

Why does diversity matter at the Fed? Geography.

See also Kaleb’s thread with more details on geographic diversity and how President Biden’s nominees fall (unncessarily) short.

Kaleb Nygaard @KalebNygaard

🥂Cheers to all of us for surviving the wait for the full suite of Fed nominees 🥂 I’ve written a lot about Fed diversity over the last few years. It’s time for a #FedThread 🎉 on the geographic diversity requirement for Governors. 1/13

Why does diversity matter at the Fed? Race and Ethnicity.

Here’s Kaleb’s thread with links to more data on the racial diversity:

Kaleb Nygaard @KalebNygaard

From @ChrisBrummerDr brookings.edu/research/what-… From @davidwessel @lsheiner and @mjng_93 Gender and Racial Diversity of Federal Government Economists brookings.edu/wp-content/upl… [3/10]

We are hearing more and more backlash about the “woke Fed” which in addition to being out of touch with the reality shows an ignorance of the dual mandate. The mandate of maximum employment came directly out of the Civil Rights movement.

Claudia Sahm @Claudia_Sahm

populardemocracy.org/news/publicati… the Fed's dual mandate came out of the Civil Right's movement. Black-white unemployment rate gap is not a sideshow to monetary policy. its an original driver for maximum employment mandate.

populardemocracy.orgThe Full Employment Mandate of the Reserve: Its Origins and Importance

Wrapping Up

It’s exciting to know President Biden’s nominees for the Board of Governors. It’s a strong team. The sum is greater than the parts! At that’s good. The policy decisions the Fed faces this year are more difficult than they have seen in decades. This time next year we could singing praise of the Fed or screaming in anger at it. Fed officials, include Biden’s nominees, will be decisive. Godspeed.

Here is the Full Video:

Here is the Full Audio:

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