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The Squad calls on Biden to dump Fed chair over climate change and ‘racial and economic justice’

August 31, 2021 | | Print Article

Reps. Alexandria Ocasio-Cortez, Rashida Tlaib, and Ayanna Pressley demanded on Monday that President Biden replace Federal Reserve Chair Jerome Powell in order to focus on climate change and “racial and economic justice.”

The Squad is applying pressure to Biden as he inches closer to deciding on the government’s most important economic post.

The progressive Democrats released a statement that is part of a growing effort on the left to get President Biden to reform the Federal Reserve. Liberals appear to be split on removing Powell.

“As news of the possible reappointment of Federal Reserve Chair Jerome Powell circulates, we urge President Biden to re-imagine a Federal Reserve focused on eliminating climate risk and advancing racial and economic justice,” the lawmakers said jointly in a statement given to POLITICO. “We urge the Biden Administration to use this opportunity to appoint a new Federal Reserve Chair.” They were joined by Reps. Mondaire Jones (D-NY) and Jesús García (D-IL).

The Squad acknowledges that the Fed “has made positive changes” concerning reaching full employment. But now they want someone controlling the Federal Reserve who is more aggressive in regards to financial regulation and climate change. They did mention rising inflation or the dangers it presents.

“Under his leadership, the Federal Reserve has taken very little action to mitigate the risk climate change poses to our financial system,” proclaimed Ocasio-Cortez, Tlaib, and Pressley. They all now sit on the House Financial Services Committee.

The progressive lawmakers cited the D-minus rating the Fed received for its approach to climate risk policies from Positive Money’s Global Central Bank Scorecard. They claimed the grade put the Federal Reserve “at the bottom of the G20 Central Banks.”

“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,” they asserted.

The Squad also pointed to moves made by the Fed under Powell, who was appointed under Barack Obama and then served under Donald Trump, to reduce regulations on big banks. They stated in their letter that Powell has “substantially weakened many of the reforms enacted in the wake of the Great Recession regulating the largest banks, including capital and liquidity requirements, stress tests, the Volcker Rule, and living will requirements.”

“Weakening financial regulations that were specifically created to prevent such a disaster from happening again risks the livelihoods of Americans across the country,” the Democrats stated. “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.”

Powell’s term ends in February and President Biden is expected to make a decision on the post as early as September.

Ocasio-Cortez, Tlaib, and Pressley have not suggested a replacement for Powell. However, Lael Brainard is considered to be a qualified replacement for him. She is a current member of the Fed board who would potentially continue Powell’s interest rate policy while supporting regulation and climate change.

Twenty-two liberal groups have also joined together to urge Biden to pick Federal Reserve leaders who will shift the central bank’s approach radically to the left.

Their letter alluded to the possibility that Biden might name an aggressive regulator to replace outgoing Vice-Chair of Supervision Randal Quarles. He is seen as being too lenient by the left.

“We encourage you to remember that the Fed is a hierarchical institution, in which the Vice-Chair and Vice-Chair for Supervision wield considerable agenda-setting power, but are ultimately deferential to the Chair’s initiatives,” they admonished Biden.

Many on social media pointed out that climate change, as well as racial and economic justice, should have no effect on the Federal Reserve – that’s ostensibly not its purpose: (** Language warning)

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Terresa Monroe-Hamilton
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