Jerome Powell: a new Chair of the Fed

Jerome Powell: a new Chair of the Fed

2019-11-11 • Updated

The current Chair of the Board of Governors of the Federal Reserve is Janet Yellen, but her term expires in February 2018. She will be replaced by a member of the Fed Board of Governors Jerome Powell.

Let’s have a look at his background and main political views.

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Early ages

Jerome Powell was born on February 4, 1953, in Washington, D.C. In 1975 he received a Bachelor of Arts in politics from Princeton University. In 1979 he earned Juris Doctor Degree from Georgetown University Law Center.

Career

Here are the most important steps in Powell’s career.

From 1992 to 1993, Powell became the Under Secretary of the Treasury for Domestic Finance being nominated by George H.W. Bush. He was responsible for policy on financial institutions, the Treasury debt market, and related spheres.  

From 1997 to 2005, he was a partner at The Carlyle Group where he founded and led an industrial group. After that, he launched and worked in others private investment firms. However, Powell worked not only in finance, he also served on boards of charitable and educational institutions.

On May 2012 Jerome Powell entered the Federal Reserve System to fill an unexpired term. Then in 2014, he was reappointed for a term ending only in January 2028.

Policy

As a member of the Board, Jerome Powell has not declined ideas to raise the federal funds rate. For such decisions, he is seemed to be dovish on monetary policy and would continue the same approach of the relatively low interest rates as a new Chair of Fed. But The Bloomberg Intelligence Fed Spectrometer considers Powel as a neutral politician. However, it is worth to say that Mr. Powell is expected to carry out the same policy as a previous Chair, that will have a good impact on the economy and will not create great changes.

Powell is expected to support Trump’s easing of post-crisis financial regulations. Powell also claimed that higher capital and liquidity requirements and stress tests affect the financial system to making it safer, so they should be preserved. But at the same time, he talked about the re-writing of the Volcker Rules (a federal regulation that prohibits banks from conducting certain investment activities with their own accounts).

In June 2017 Powell announced 5 main objectives and directions of the Fed’s policy:

  • Simplification of regulation for small and medium-sized banks.
  • Resolution plans:  Financial institutions in the stress should provide their strategy for rapid and orderly resolution in the event of material financial distress or failure not every year, but once every two years, and focusing every other of these filings on key topics of interest.
  • Volcker Rule: Reassessing whether the implementing regulation most efficiently achieves its policy objectives. Consider eliminating or relaxing aspects of the regulation without undermining its mail policy goals.
  • Enhance the transparency of stress testing and the Comprehensive Capital Analysis and Review.
  • Supplementary Leverage Ratio: assess relative calibrations of the leverage ratio and the risk-based capital requirements.

Interesting Facts

  • Jerome Powell is the first Chair in 40 years who does not have an economics PhD.
  • He would be the richest central bank head ever.
  • Between 2010 and 2012 year Powell worked on getting Congress to raise the US debt ceiling during the US debt-ceiling crisis of 2011. His salary was $1 per year.

In conclusion, it can be said that such person as Jerome Powell can continue to improve the economic growth having such a huge experience in investments and finance. Also as it was written above the policy of Powell will be quite similar to the previous Chair policy, it means that the economic situation will be stable and without great shocks that can affect the economy.

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