The Roosevelt Institute’s Priorities for the Next Federal Reserve Chair
August 16, 2021
By Suzanne Kahn
This fall, President Biden will face a momentous choice when he decides who to nominate or renominate to be chair of the Federal Reserve. The Federal Reserve (the Fed), the nation’s central banking system, has a dual mandate to maximize employment and stabilize prices; it is also charged with regulating the nation’s banks and keeping the country’s financial system stable. As a think tank focused on building an equitable and sustainable economy and society, the Roosevelt Institute is closely watching President Biden’s decisions around who will helm the Federal Reserve—a decision that will help determine the scale and structure of economic policymaking, and the landscape in which all policy is enacted, for years to come.
The four-year Fed chair term that will begin in February 2022 will be a pivotal moment for many of the intertwined crises our nation faces: Hopefully, the COVID-19 pandemic and the immediate economic turmoil it has caused will be winding down, but given the lingering uncertainties of the pandemic and the severity of personal and financial losses sustained in 2020 and 2021, it is all but certain that many Americans will still be struggling to make ends meet in 2022. The pandemic has only deepened growing economic and persistent racial inequality in the United States, and the next four years will also require decisive action if we are to prevent the worst of the climate crisis. In its next term, the Federal Reserve must face all of these crises directly and simultaneously, or else each of them will not only continue but lead to long-term financial instability.
Today, Roosevelt Institute staff representing three different program areas—Corporate Power, Climate and Economic Transformation, and Macroeconomic Analysis—lay out their agendas for the next Federal Reserve term. The authors of each of the following blog posts share an understanding that an equitable and sustainable economy requires a robust labor market, where anyone who wants a job can get one, and that full employment will make it possible to address the many other crises our nation faces.
But, as their writings also explain, the Fed can and must use its regulatory powers to address the climate crisis and narrow inequality. Over the next four years, it should prioritize making our banking system more inclusive, reining in corporate profiteering, and, crucially, curbing investments in fossil fuels. As the authors explain, it can do this not only by continuing to prioritize full employment, but also by using its regulatory powers (in normal times and, especially, in times of crisis) to reshape how corporations do business over the long term.
Inequality and the climate crisis are destabilizing forces that threaten our financial system—tackling each head-on is not simply a progressive priority, but necessary for our future economic prosperity. The Fed must take these threats seriously if it is to successfully fulfill its mandate.