Jerome “Jay” Powell is taking the helm of the Federal Reserve System. The job of Fed chair is often called the second most powerful in the United States, since board actions on interest rates and money supply affect the health of the world’s largest economy.
The Senate approved President Trump’s nominee by an 84–13 vote. Powell, an attorney and former investment banker who is already a Federal Reserve governor, will succeed Janet Yellen on February 3, when her four-year term as chair expires.
Trump said Powell will be “a wise steward” who will help keep the U.S. economy surging forward. “He’s strong, he’s committed, he’s smart,” Trump said, standing next to Powell in the White House’s Rose Garden November 2.
Powell has voted with Yellen on recent Fed decisions to raise historically low interest rates to spur growth of the U.S. economy.
Powell, a graduate of Princeton University and Georgetown University Law School, said, “I will do everything in my power” to achieve the Federal Reserve’s goals of stable prices and maximum employment.
What is the Fed?
Congress created the Federal Reserve in 1913 to make the U.S. monetary and financial system more stable. Known as the Fed, it is led by seven governors appointed by the president and confirmed by the Senate for 14-year terms.
The Fed chair, one of those seven, leads by consensus.
The Fed’s Open Market Committee — the governors and five presidents of regional Federal Reserve banks — votes to set interest rates. The chair casts just one of the 12 votes.
The Fed operates independently. Neither Congress nor the White House can override its policies and decisions. The president cannot fire the chair.
The Federal Reserve is an independent government agency with both public and private characteristics. While accountable to Congress, it doesn’t rely on appropriations.
The Fed also regulates banks. Powell will assume the post at a time when unemployment is the lowest in 16 years and the stock market stands at record highs.
During the 2008 global financial crisis, the Fed purchased $4 trillion in Treasury bonds and mortgage-backed securities, slashed interest rates to near zero, and took other steps to keep financial markets from collapsing.
Its staff of 20,000 gathers voluminous economic statistics to take the pulse of markets across the country to inform the governors’ decisions.
Yellen, the 15th Fed chair and first woman, will step down early from her term as a governor. Powell was first appointed a governor by former President Barack Obama. His current term as a governor runs until 2028.
Biking to work
Powell was raised in Washington, an attorney’s son. He worked as a Senate aide, practiced law, then switched careers to work in investment banking. He also served as an under secretary of the Treasury under former President George H.W. Bush.
President Trump extolled Powell’s private-sector experience, saying he brings “real-world perspective to our government.”
According to the Washington Post, Powell bikes eight miles to work each day.
A version of this article was published on November 2, 2017.