One might expect Democrats to reflexively block or at least oppose President Trump’s nominee to head the Fed out of a fervent opposition to the president himself, but so far the party has held its fire on Powell’s nomination. It is clear that Democrats were hoping for the current Federal Reserve chair, Janet Yellen, to be renominated, but thus far none of the more adamant Wall Street hawks have come out in open opposition to Powell’s pick.
Nonetheless, that might still happen. Sen. Sherrod Brown of Ohio, the top Democrat on the Senate Banking Committee, said in a statement
that he hoped Powell would not “have the same amnesia that plagues the rest of the administration” about the devastation wreaked by the financial crisis. And Sen. Elizabeth Warren, D-Mass., said in an interview
with CNBC earlier this month that she was reserving her judgment for after Powell’s hearing.
“Powell has aligned himself with Janet Yellen on a regular basis, and that is a good sign, but look this is what hearings are about,” Warren said. “I’m going to ask him some tough questions and see what his answers are.”
Those tough questions are likely to revolve around Powell’s recent initiative to change the Fed’s procedures regarding what supervisory issues must be sent to bank boards of directors — a change that Powell has defended
as practical and prudent but that critics
have said amounts to giving bank boards a pass.
Another probable area of inquiry from Warren and other Democrats is the state of the Fed’s ongoing investigation and potential enforcement actions against Wells Fargo. Yellen said in September that she considered the bank’s behavior leading up to the cross-selling scandal “egregious and unacceptable
” and hinted that further sanctions could be in the works. Warren will probably look for a similar commitment from Powell.