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The nominees would bring more diverse leadership to the Fed, which has struggled to expand its ranks.
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By Jeanna Smialek
President Biden plans to nominate three new Federal Reserve officials as he seeks to remake the central bank at a critical economic moment, a White House official familiar with the matter said on Thursday.
If confirmed, his picks would result in the most diverse Fed board in the institution’s history.
The White House plans to nominate Lisa Cook, an economist at Michigan State University who has researched racial disparities and labor markets, and Philip Jefferson, an economist and administrator at Davidson College, to open seats on the Fed’s Board of Governors. Both Ms. Cook and Mr. Jefferson are Black.
Mr. Biden will also nominate Sarah Bloom Raskin to serve as the Fed’s vice chair for supervision, a job created to help police the nation’s largest banks after the 2008 financial crisis.
Mr. Biden had previously nominated Jerome H. Powell for a second stint as Fed chair and Lael Brainard, now a governor, as vice chair of the central bank. If they are confirmed to their posts, the seven-person Fed board would have four women, one Black man and two white men — the most diverse team in the Fed’s roughly 108 years of existence.
The administration had promised to make the Fed — historically dominated by white men — look more like the public it served, and prominent lawmakers have pushed for a focus on tougher financial regulation. The picks seek to deliver along those dimensions.
“The headline is, and should be, about diversity,” said Kaleb Nygaard, a senior research associate at the Yale Program on Financial Stability who studies the Fed, explaining that personnel choices are a big moment for Mr. Biden. “This is the biggest chance he’s got to send a message about what he wants the Fed to be focused on.”
Ms. Raskin, who served as a Fed governor during the Obama administration, has a track record of arguing for more forceful bank oversight and would be likely to usher in an era of stricter rules for the titans of global finance, a priority of some powerful congressional Democrats.
If confirmed, Ms. Raskin would be in charge of determining the need for new financial regulations, enacting existing rules and running large and globally important banks through their annual health checks, which are commonly called stress tests.
Ms. Raskin would succeed Randal K. Quarles, who was appointed by former President Donald J. Trump and had criticized some of the rules that were imposed on banks after the 2008 financial crisis. As vice chair, Mr. Quarles instituted a number of adjustments to regulation and supervision that made oversight less onerous for banks, and that critics argued weakened financial rules.
Mr. Quarles’s term as vice chair expired in October, and he left the Fed at the end of December.
Ms. Raskin, a Harvard-trained lawyer who studied economics as an undergraduate at Amherst College, has spent time in the private sector. She is a former deputy secretary at the Treasury Department, where she focused on financial system cybersecurity, among other issues. She also spent several years as Maryland’s commissioner of financial regulation. Ms. Raskin is married to Representative Jamie Raskin, a Maryland Democrat.
If confirmed, Ms. Raskin will face a number of pressing issues. The vice chair for supervision serves as the Fed’s chief connection with banks and markets, a role that will take on more prominence as the central bank considers whether to issue a digital currency. The vice chair will have to navigate new technologies, like stablecoins and cryptocurrencies, and assess what those mean for banks.
The Fed is developing climate-risk scenarios to judge banks’ exposure, something the vice chair for supervision will be highly involved in. And the person will need to work with other regulators at the Financial Stability Oversight Council — an interagency group focused on guarding against systemic financial risks — to deal with weaknesses in money market funds and other financial instruments that the pandemic laid bare.
Mr. Biden’s other picks for the Fed would also enter their jobs at a challenging juncture, as unemployment falls swiftly and inflation remains high, but millions of former workers are still missing from jobs.
The Fed is contemplating how quickly to react by removing support from the economy, and all governors hold a constant vote on monetary policy, giving the new picks a potential say in the matter.
Dr. Cook — who would be the first Black woman ever to sit on the Fed’s board — is well known for her work in trying to improve diversity in economics, including through the American Economic Association Summer Program, which helps to prepare undergraduates for potential careers in the field.
She attended Spelman College and the University of Oxford and earned a doctorate in economics from the University of California, Berkeley. She was an economist on the White House Council of Economic Advisers under President Barack Obama.
She has not said much publicly about her monetary policy philosophy, though she has spoken favorably about keeping the Fed independent from politics. Her published work examines a wide range of topics: her doctoral thesis focused on credit markets in tsarist and post-Soviet Russia, while some of the work she is most famous for looked into mortality and race, and segregation and lynching.
Dr. Cook is an academic focused on macroeconomics, but “she is not a traditional one — she has looked at what we get wrong, sometimes, in the economy,” Julia Coronado, founder of the research firm MacroPolicy Perspectives, said in an interview before the pick was announced. “She is somebody who can hold her own, I think, in that room.”
Mr. Jefferson has worked as a research economist at the Fed board, and studied at the University of Virginia and Vassar College. He has written about the economics of poverty, and his research has delved into whether monetary policy that stokes investment with low interest rates helps or hurts less-educated workers.
“My findings suggest that opportunities start to open up for them as the labor market gets tight,” he said in an interview with the Minneapolis Fed in 2018.
He has also spoken candidly about his experience as a minority in economics.
“In graduate school at the University of Virginia, I was the only African American in the program the entire time there,” he said in that 2018 interview, noting that that had followed him into his professional appointments. “It has been a long, lonely road professionally.”
And he said economics needed more diverse voices.
“We need to be sitting around the table,” he said. “I think it is crucially important for public policy that we hear voices that represent diversity.”
With the new slate of candidates, what is arguably the top policymaking body in global economics will become much more varied in both race and gender.
There were briefly three women on the board in the early 1990s, and again in the 2010s. The Fed has had three Black board members in its history, all men, and none of them sat on the board contemporaneously.
It is unclear how the reworked board might alter debate over current monetary policy, which could involve sticky choices about how quickly to slow an economy struggling with rapid price increases. The Fed has signaled it is prepared to raise interest rates, which could choke off inflation but also slow the job market and wage growth.
Mr. Powell, the Fed chair, emphasized this week that achieving full employment — a goal that the Fed has emphasized in recent years as a way to foster inclusion and opportunity across the economy — depended on maintaining price stability.
“If inflation does become too persistent, if these high levels of inflation get entrenched in our economy, and in people’s thinking, then inevitably that will lead to much tighter monetary policy from us, and it could lead to a recession, and that would be bad for workers,” Mr. Powell said while testifying before lawmakers on Tuesday.
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