Fed’s Brainard seen at top of Biden’s Treasury secretary list
Democratic presidential nominee Joe Biden’s search for a Treasury secretary is widely seen as focusing on Lael Brainard of the Federal Reserve, a choice that would keep both Wall Street and progressives in line.
The more provocative choice of Sen. Elizabeth Warren hasn’t been ruled out but is far less likely, and other possible names are being discussed for the top finance job if Biden wins November’s election, according to nine people familiar with the candidates and Biden’s thinking.
The former vice president wants to make a historic choice for the job that has always been held by a white man, some of the people said. But he also wants a Treasury pick who would be universally accepted and Brainard, a member of the Fed’s board of governors, could fit that bill. She wouldn’t upset Wall Street or progressives, two constituencies that Biden would want on his side in working toward an economic recovery and avoiding Democratic infighting.
One person who has discussed Brainard’s career moves with her said that she has expressed more interest in being Fed chair than in leading the Treasury, but wouldn’t turn Treasury down if offered.
Current Fed Chair Jerome Powell, picked by President Trump, is slated to serve until 2022, at which point the president may reappoint him or choose someone else.
Warren, meanwhile, has fans who argue that she is skilled at communicating economic policy to the country and within Washington, and could help a Biden administration execute a larger-scale plan to reshape the economy than other candidates.
Financial industry worry
But her antipathy to Wall Street and progressive views would worry the finance industry, which has long feared her legislative and regulatory wrath.
“If the Treasury pick were Brainard, the markets would take that as a signal that Biden intends to govern as a moderate, not give in to the progressive wing, so it sends a broader message,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. “There would probably be some measure of relief that it’s not Elizabeth Warren but someone viewed as far less hostile.
Dislike on Wall Street for Warren runs deep.
“She’s spent her entire career in Congress on a crusade against the banks,” said Thomas Simons, a strategist at Jefferies in New York. “Wall Street would absolutely hate to have her as Treasury secretary.”
Ex-Fed official Roger Ferguson and Atlanta Fed president Raphael Bostic, both Black men, are also seen as possibilities for the job, people familiar with the matter said. Former Treasury Deputy Secretary Sarah Bloom Raskin is said to be lobbying for the role, they said. Any of these candidates could land elsewhere on a Biden administration’s economic team.
Brainard, Warren, Bostic and Raskin declined to comment, as did the Biden transition team. Ferguson did not respond to requests. All of the people who discussed the candidates’ possible Treasury picks asked not to be identified because no decisions have been made.
With the election 39 days away, Biden is leading Trump by about 7 percentage points in national polls and is ahead by a narrower margin in most battleground-state polls.
If Trump wins reelection, Steven Mnuchin, who has served as Treasury chief since 2017, has publicly said he would serve a full second Trump term. Mnuchin declined to comment through a Treasury Department spokesperson.
Biden aides have suggested he may announce some of his Cabinet picks before the election.
Filling the role of Treasury secretary is a recruiting challenge for even the savviest of presidents and transition teams. The job usually demands a versatility unlike other cabinet posts: someone who can speak in plain language to average Americans, command gravitas with financial markets and negotiate diplomatically with foreign finance ministers and members of Congress.
Whoever is in the job in 2021 will face an economy ravaged by COVID-19. The unemployment rate remains elevated at 8.4%, after hitting a half-century low in February before the pandemic shut down the economy. The next Treasury chief may need to navigate an impasse in Congress over stimulus funding, and work through markets to finance massive amounts of government spending.
Aware of the headwinds, Biden’s Wall Street donors have been talking up potential candidates from their own ranks, such as BlackRock’s Larry Fink or Blackstone’s Tony James.
Fink told his senior leadership team and the board that he was not interested in a job in Washington, and would remain at BlackRock, according to a person familiar with the matter.
Fink and James both declined to comment through spokespeople.
Since Hillary Clinton considered candidates for the position in 2016, Democrats have agreed that the party’s next pick to lead the department would be a woman, something that people knowledgeable about the selection process still say is likely.
Obama administration alumni supportive of Brainard are casting her as a potential middle ground among all the forces that would be weighing on Biden post-election.
Progressives don’t object to her as they would a former Wall Street executive. They say that even though they don’t see her as one of their own, they give her credit for reaching out to progressives in recent years.
Brainard, 58, a Harvard-educated economist, has been on the Fed’s board since 2014. In recent years, she has made efforts to lean toward more progressive policies such as the Community Reinvestment Act. In January she gave a speech highlighting reform efforts necessary to encourage more lending in low- and moderate-income markets.
She also served as a Treasury undersecretary for international affairs under former President Barack Obama, when Biden was vice president.
Still, the progressive wing of the Democratic Party may influence Biden’s personnel choices for his economic team. Nearly two dozen progressive organizations wrote a joint letter to the Biden campaign on Thursday, demanding a pledge to appoint candidates supporting more spending to create a more equitable economy.
“The pandemic and economic crisis demand the federal government respond as it did during the Great Depression and World War II,” according to the letter. Signatories include Demand Progress and the Revolving Door Project. “Candidates must match their words with action and pledge to install personnel we can rely on to follow through.
Biden has been courting wealthy bankers throughout his candidacy, even as he describes the choice between him and Trump as one between Scranton, Pa. — his working-class birthplace — and Wall Street.
Employees of securities and investment firms poured $9.2 million in a little more than two months into the Biden Victory Fund, which raises money for Biden and the state and national Democratic parties, according to the Center for Responsive Politics. The fund hasn’t disclosed donations since June 30, but super-political action committees, which file more frequently, have raised $43.3 million from industry donors through July.