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Progressives call on Biden to replace Powell as Federal Reserve chair

A group of progressive lawmakers led by Congresswoman Alexandria Ocasio-Cortez is calling on President Biden to replace Federal Reserve Chairman Jerome Powell, whose term expires early next year. The lawmakers said Powell, who has served as head of the Central Bank since 2018, has not done enough to address the risks of climate change on the financial system and has weakened regulations.

"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," wrote the group of lawmakers, which includes Representatives Ayanna Pressley of Massachusetts, Rashida Tlaib of Michigan, Jesus Garcia of Illinois and Mondaire Jones of New York.

At the same time, the group accused Powell of "substantially" weakening reforms made in the wake of the Great Recession to regulate big banks. 

"During the 2008-financial crisis, millions of Americans lost their homes and jobs, and many have failed to fully recover," the statement said. "Weakening financial regulations that were specifically created to prevent such a disaster from happening again, risks the livelihoods of Americans across the country."

It's not the first time Powell has been criticized over regulations. Senate Banking Committee Chairman Sherrod Brown has publicly said he thinks Powell has done a good job overall as chair, although he has expressed concern about regulations and criticized Powell for not doing enough to keep Wall Street in check. 

At a July hearing, Brown told Powell, "During your tenure, the Fed has rolled back important safeguards, making it easier for the biggest banks to pump up the price of their stock and boost their already enormous power in our economy." Senator Elizabeth Warren has also said steps to weaken regulations worry her. Powell disputes such efforts have been made under his stewardship.

Powell has said climate change poses "profound challenges" for the global economy and that the Central Bank can play a role in analyzing  the risk but that climate change is not something it can  directly consider when setting monetary policy, asserting that the Central Bank does not exist to make climate policy. 

However, earlier this year, the Federal Reserve did announce the creation of two committees that identify and address climate-related risks on financial stability. But Republican lawmakers immediately pushed back, warning the Central Bank not to overstep its dual mandate of price stability and maximum employment. 

The White House has not said whether President Biden will reappoint Powell, only that he is engaging with his senior economic team and that decision will be made in a timely manner. According to an official, the president will appoint who he thinks will be most effective in implementing monetary policy. 

Powell, a Republican, was first nominated to the Board of Governors by President Obama in 2012. He was then nominated to head the Central Bank by President Trump in 2017, replacing then-Federal Reserve Chair Janet Yellen after one term.

When asked whether Powell was doing a good job in a July interview, Yellen praised the Central Bank. 

"I have a lot of respect for the Federal Reserve and it's important for them to make independent judgments about what's appropriate. I think that, you know, the Fed has done a good job," Yellen told CNBC. 

On whether she would recommend him for a second term, Yellen has declined to comment, saying only that it was a conversation she would have with the president.

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