Biden nominates historically diverse slate of nominees to Fed's key posts

U.S. President Joe Biden has picked former Federal Reserve Governor Sarah Bloom Raskin for the Fed's key regulatory post and two Black economists - Lisa Cook and Philip Jefferson - to serve on its board in what would represent a landmark demographic overhaul of the world's most powerful central bank.

The White House sent the nominations to the Senate late on Thursday, according to a source familiar with the process.

The appointments would fill out the ranks of a seven-member panel that wields tremendous influence over the U.S. economy and would make the Fed's top leadership the most diverse by race and gender in its 108-year history.

The appointments come as Biden's own plans to reboot the economy after the COVID-19 pandemic have run into an unexpected spike in inflation.

"President Biden has nominated a serious, qualified, nonpartisan group of five nominees for the Board of Governors of the Federal Reserve who together will bring an extraordinary amount of skill, experience, and competence to the Federal Reserve," said the source familiar with the nominations.

"They will prioritize the independence of the Federal Reserve and are committed to fighting inflation, maintaining stability in our economy in the midst of the pandemic, and making sure our economic growth broadly benefits all workers." Cook, a professor of economics and international relations at Michigan State University, would be the first Black woman to serve as a Fed governor. Jefferson, a professor and senior administrator at Davidson College in North Carolina, would be only the fourth Black man to sit on the panel and the first in more than 15 years.

Biden's nominees would mean that the seven-member Board of Governors would include four women, also a first. Currently, the Fed's board has only six members, all white and four of whom are men.

The effort to make the central bank look more like America comes at a critical time. Inflation is at its highest level in decades. Unemployment is down, but U.S. employers have millions fewer workers on their payrolls than they did before the pandemic.

The Fed, charged with both keeping prices stable and maximizing U.S. employment, is debating how fast and how far to raise interest rates and otherwise tighten monetary policy to rein in inflation without short-circuiting the labor market.

The Fed's current leadership has already signaled readiness to start raising interest rates as early as March, dialing back from an ultra-accommodative footing that could test financial markets and influence the pace of recovery during an election year in which control of Congress is on the line.

Leading the pivot is Fed Chair Jerome Powell, whom Biden late last year asked to serve a second four-year term as chairman, starting next month. The Senate Banking Committee held Powell's nomination hearing on Tuesday, while Fed Governor Lael Brainard, who Biden has nominated to be the central bank's vice chair, appeared before the panel on Thursday.

Progressives had lobbied for more diverse picks to lead the Fed; the slate Biden put forward Thursday helps meet that demand.

Raskin, who spent four years as a Fed governor before being tapped as a deputy Treasury secretary from 2014 to 2017, is expected to bring tougher oversight to bear on Wall Street than the Fed's previous vice chair of supervision, Randal Quarles, who left the Fed at the end of last year.

Cook has written extensively about the economic consequences of racial disparities and gender inequality, and growing up lived through the violence of school desegregation in the U.S.

South. Jefferson has written extensively on wages, poverty and income distribution.

Kevin Hassett, who chaired the Council of Economic Advisers under former President Donald Trump, said Jefferson was an
"incredibly smart economist" and serious academic who should be confirmed by the Senate quickly.

"He's the kind of honorable, serious person at the Federal Reserve should have."