President Joe Biden said he’d nominate Federal Reserve Governor Philip Jefferson as vice chair and Adriana Kugler as governor, setting her on a path to become the central bank’s first policymaker of Latino heritage in its 109-year history.
Kugler, 53, was chosen to fill a vacancy left by the departure of Lael Brainard, who in February became the director of Biden’s National Economic Council, while the president selected Jefferson, 61, for the vice chair post previously held by Brainard.
The pair of nominations, which require Senate confirmation, became the favored strategy as pressure mounted from Senator Robert Menendez of New Jersey — who has long called for Biden to nominate a Latino person to the Fed — and other Democratic lawmakers. The administration had considered naming a non-Latino to the vice chair position and leaving Jefferson as a governor, according to people familiar with the discussions.
The president also announced his intent to nominate Lisa Cook, who joined the board as a governor last year, to a full 14-year term. Her current term expires in January.
“These nominees understand that this job is not a partisan one, but one that plays a critical role in pursuing maximum employment, maintaining price stability, and supervising many of our nation’s financial institutions,” Biden said in a statement Friday. “I am confident these nominees will help build upon the historically strong economic recovery we have had under my administration.”
The nominations were made at a time of economic angst, with the nation facing a possible default if Congress fails to raise the debt ceiling, the financial industry shaken by bank failures and the Fed itself trying to extinguish inflation without triggering a recession.
If confirmed, Kugler, who is Colombian-American, would join a diverse roster of Biden appointees on the board. Cook, 58, became the first Black woman in that position. Jefferson, who is the fourth Black male governor in Fed history, would become just the second Black vice chair, following Roger Ferguson.
Kugler is now the US representative to the World Bank. She was nominated to that position in 2021 and was confirmed by the Senate last year in a voice vote. If confirmed to the Fed post, Kugler would serve a term that expires in January 2026.
She holds a doctorate in economics from the University of California at Berkeley and served as chief economist at the Labor Department in President Barack Obama’s administration. Her research on labor markets, in particular, will likely be welcomed by progressive lawmakers who have argued that the Fed’s aggressive actions to curb inflation may lead to widespread job losses.
“She understands what the Fed is about — both the bad effects of inflation but also at the same time how putting the brakes on the economy might affect different groups differentially,” said Alfonso Flores-Lagunes, president of the American Society of Hispanic Economists and an economics professor at Syracuse University.
Flores-Lagunes said the nomination was “fundamental,” calling the lack of Hispanic represenation at the Fed a “glaring aspect of inequality” in the US.
Jefferson, who spent the bulk of his career in academia, was an economist at the Fed’s Board of Governors in the 1990s. Before obtaining his doctorate in economics from the University of Virginia, he participated in the American Economic Association’s pipeline program for minority students.
He was confirmed to the board in a 91-7 Senate vote last year, with Republicans praising his commitment to the Fed’s narrow mandates and Democrats applauding his research on poverty and diversity.
The lopsided previous confirmation vote raises the prospect of a relatively smooth path to the vice chair post — though that was effectively a dual-track process where another candidate, Cook, drew heavy Republican opposition.
Senate Concession
The move is a concession to dynamics in the Senate and, chiefly, Menendez.
“I have fought to ensure that institutions like the Federal Reserve better reflect America with the goal of effectuating policies to encourage broad-based economic growth for all communities,” Menendez said Friday in a statement. “President Biden is signaling that the hopes and dreams of Black and Latino Americans are central to the promise of America.”
With a slim majority in the Senate — Democrats hold 51 seats to Republicans’ 49 — Biden couldn’t afford to nominate candidates that wouldn’t garner support from his own party, as a non-Hispanic candidate may have done. Menendez voted against the renomination of Jerome Powell last year, criticizing the Fed chair for not elevating Latinos to leadership positions at the central bank.
The White House was initially said to have zeroed in on Northwestern University professor Janice Eberly to replace Brainard, both as a governor and as vice chair.
But Menendez insisted on a Latino candidate, reprising calls made during past vacancies at the Fed’s board and the reserve banks, arguing that the country’s monetary policymaking institution should be representative of the overall population, 19% of which is Hispanic.
The White House then moved to prepare a slate of announcements, and explored whether naming a Latino to another posting would win Menendez’s support. But he dug in.
The White House pivoted away from Eberly to another scenario: splitting the two roles vacated by Brainard, adding a new member but picking an existing one to serve as vice chair.
Senator Sherrod Brown, chairman of the Banking Committee, praised the three nominees in a statement and said he would work to confirm them quickly.
Tim Scott, the panel’s ranking Republican, said in a release that he would thoroughly vet each of the president’s picks to ensure they are “equipped to address our nation’s economic challenges.”
--With assistance from Dave Merrill and Ana Monteiro.
(Upates with additional context in 17th paragraph.)