Lael Brainard, second-in-command at the Federal Reserve, is a contender to be the next top economist at the White House, in what would be a major setback for the US central bank as it faces its worst inflation crisis yet. Over the decades.
The Biden administration is considering replacing Brian Deese, who served as undersecretary for international affairs at the Treasury Department during Barack Obama’s administration, as the next head of the National Economic Council, according to people familiar with the matter.
Dees has held the position since 2021 and has helped guide the White House’s economic policy through Covid-19 and the subsequent spike in inflation. While Dees is expected to leave the White House, there is no set date for her departure.
There are other contenders besides Brainard in the mix for the job, and Biden has not made a final decision on the role, people familiar with the matter said. Also under consideration are current White House economic officials Jean Sperling and Bharat Ramamurthy, as well as former White House budget director and American University president Sylvia Matthews Burwell.
The Washington Post first reported that Brainard was being considered for the role.
If elected, her departure would leave a top leadership position vacant at the Fed as it wrangles over how much to raise its policy rate after its most aggressive campaign since the early 1980s. After a string of jumbo 0.75 percentage point rate hikes lifted the federal funds rate by more than 4 percentage points since March, officials are preparing to return to more modest quarter-point increments at their next policy meeting next week.
Brainard, a Democrat who has been at the Fed for nearly a decade, has long been one of the fiercest voices on the Federal Open Market Committee, advocating a prudent approach to tightening monetary policy and taking into account potential economic and financial risks. With rapidly rising borrowing costs.
She has pushed for tighter regulation of the nation’s largest banks as well as for the central bank to more directly include climate-related risks in its oversight responsibilities — positions that won her praise from the progressive wing of the Democratic Party.
Before her nomination for the vice-chair position in November 2021, Brainard was also considered a leading contender for the top job at the Fed and, before that, Treasury secretary.
If Brainard replaces Diez, the Biden administration will need to appoint another vice-chair, which has already dramatically reshaped the central bank’s top ranks. In addition to reappointing Jay Powell as chairman, the White House named economists Lisa Cook and Philip Jefferson as governors and Michael Barr as vice-chair for oversight.
Biden’s initial pick for the supervisory role, Sarah Bloom Raskin, was blocked by lawmakers, who took issue with her calls for regulators to be more proactive about climate-related financial risks.