With the formal announcement today that President Trump is nominating Jay Powell as the next Chair of the Federal Reserve Board of Governors, it’s not a bad time to breath out … and then breath in.
Breath out a sigh of relief that the President chose someone who respects CDFIs and the Community Reinvestment Act (CRA), at least based on my interactions with him over the years. The corollary is that the President did not choose Stanford Professor John Taylor, who is a CRA antagonist.
Breath in with a measure of apprehension, however, because Jay Powell is no Janet Yellen.
Yellen is a champion of CDFIs, CRA, and community development in ways and at a level that no other Federal Reserve Board Chair could approach. Earlier this year, at the National Community Reinvestment Coalition’s annual conference, Yellen showed her cards with candor that is unusual for a Fed Chair:
Whether you work to provide affordable housing, homeownership counseling, small business credit and technical support, or workforce development, I hope you know that you have a partner in the Federal Reserve. In the ways we can, with the different tools we each have, our aim is the same: to make the economy work for the benefit of all Americans. This goal is of utmost importance, and I am glad to work alongside you in striving to achieve it. [emphasis added]
Chairman Ben Bernanke became a friend to CDFIs and CRA during his tenure. Former Federal Reserve Board Governor Edward (Ned) Gramlich was an outspoken proponent and advocate.
Yellen stands alone, however, and deserves both praise and thanks as she finishes her time as Fed Chair. As Chair of President Clinton’s Council of Economic Advisors, as Vice-Chair of the Fed’s Board of Governors, as President of the Federal Reserve Bank of San Francisco, and as Fed Chair, she spoke her mind forcefully and with conviction on many topics. CRA and CDFIs are never an afterthought for her; they are a primary topic of interest, support, and concern.