The White House is considering promoting Federal Reserve Governor Philip Jefferson to vice chair and naming a Latino candidate to an open board slot in a shift from prior plans, according to people familiar with the matter.
(Bloomberg) — The White House is considering promoting Federal Reserve Governor Philip Jefferson to vice chair and naming a Latino candidate to an open board slot in a shift from prior plans, according to people familiar with the matter.
The maneuver is under consideration as a potential response to pressure from Senator Robert Menendez, who has called for a Latino person to be appointed to the Fed. The vice chair candidate who emerged earlier in the process as a front-runner, Northwestern University Professor Janice Eberly, remains in contention but is not Latina.
The alternative scenario would see Jefferson elevated to a four-year term as vice chair to replace Lael Brainard and a new candidate nominated to the governor vacancy, a term that would expire in January 2026.
It’s not clear whether Jefferson’s nomination is now the likeliest scenario, though the idea has gained traction inside the White House, the people said. The situation remains fluid, they said.
Jefferson, whose term on the Fed board doesn’t expire until 2036, was confirmed by the Senate last year with broad bipartisan support, suggesting he would likely face little opposition if nominated to serve as Chair Jerome Powell’s No. 2.
The Fed declined to comment. Eberly also declined to comment.
President Joe Biden is moving to fill an opening at the Fed as it weighs how high to push rates to curb inflation. Brainard was a counterbalance to Powell, and progressives have bristled at a path of hikes that they worry would throw millions out of work.
The White House has grappled with the decision and seen it drag on. The administration announced Brainard’s hiring as National Economic Council director the week of Feb. 20, and she left the Fed to take the job days after.
“You will hear something in the very near future,” White House Press Secretary Karine Jean-Pierre told reporters at a briefing Monday. The White House declined further comment.
More than two months later, those deliberations continue under pressure from Menendez, who has indicated that he would not object to a scenario where a current board member is moved to the vice chair spot and a Latino is nominated to the governor vacancy.
“The Senator has made it very clear to the Biden administration that they have a historic opportunity to nominate a well-qualified Latino or Latina. How the administration ultimately accomplishes this goal is up to them, but they should not forgo the opportunity to nominate a Latino or Latina to the Federal Reserve Board of Governors,” according to a spokesperson for the senator.
Search Process
The White House has been vetting Latino candidates as part of its search process, including economists Adriana Kugler, Ricardo Caballero and Marie Mora.
Kugler in particular is in contention to be named as a Fed governor, but it’s not clear if she’s the frontrunner among candidates of Latino heritage, the people said. Kugler, who is on leave from her job as a professor at Georgetown University, currently serves as the US executive director at the World Bank and was previously chief economist at the Labor Department during the Obama administration.
The consideration of Kugler, Caballero and Mora was reported earlier by the Wall Street Journal. The New York Times reported earlier Monday that the White House is close to nominating Kugler to the open governor position.
The White House is preparing a package of economic appointments, including the Fed pick or picks, a member of the Council of Economic Advisers and a successor to Ben Harris, who recently left a role as assistant Treasury secretary for economic policy. The Treasury Department declined comment.
The White House explored naming a Latino candidate to another senior economic role outside the Fed, a potential gambit to satisfy Menendez and stick with Eberly. However, Menendez is insisting that a Latino join the Fed, some of the people said. In its 109-year history, the Fed has never had a Latino leader.
Fed officials have signaled that the Federal Open Market Committee will hike rates another quarter-point this week to 5.25%, the highest level since 2007.
Biden’s White House has long touted appointments of Latino candidates to key roles, including four cabinet members. Biden formally launched his reelection bid last week and named Julie Chavez Rodriguez as campaign manager.
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