For Jerome Powell, the best and worst moments of his first year as Fed chair were much alike: hearing on Aug. 2 that he would win approval, then not getting it.
Powell came to Congress on Aug. 2 to receive the support of the 12 voting members of the Senate Banking Committee, the first confirmation hearing since he became Fed chair in February. About an hour into the hearing, his confirmation was deadlocked when one member of the committee, independent Sen. Bernie Sanders, I-Vt., announced that he would cast a vote against his nomination, saying Powell’s worldview was too different from his, and voicing concerns that the Fed chairman’s powers would be greatly enhanced under the Trump administration.
The news was met with dismay by the wider Washington banking community, which had been focused on the the process of putting together a president’s nomination, as opposed to a headline.
By midafternoon, a strange juxtaposition of events threatened to bring turmoil to the committee before it had even begun its session. According to The New York Times, a disgruntled former Labor Department official was spotted outside the Capitol buildings, reading articles about the hearing, and defecating on the pavement outside the congressmen’s office. It was a far cry from the reception that Powell received just a few hours earlier.
Sanders was an anomaly among senators in casting the opposing vote. There were five Democrats and two Republicans supporting Powell, while 13 members voted against his confirmation.
According to a quick tally by the Times, it was the first time since 1946 that no nominees had been confirmed by the full Senate in an initial round of voting.
Powell earned a different type of unwanted recognition in his first year as Fed chairman, starting in November.
Then, after months of Trump’s suggestive tweets about running to the White House to push off a hike in the Fed’s key interest rate, it happened, and he had his chance.
At 4:30 p.m. EST, the Fed announced that it was raising interest rates a quarter of a percentage point. The afternoon news was met with a panic in the financial markets, which had predicted the hike would come in June, not in November. It followed months of Trump pressure on Fed Chair Janet Yellen, who in November said the central bank would need to keep rates low for a “considerable time” after ending its massive stimulus efforts.
The decision caused a complete and utter panic in the U.S. financial markets, making headlines worldwide as investors fretted over the rapid rise in rates.
Those events — in both the nomination process and the broad market reaction — stood in contrast to what had already been a tumultuous first year of his tenure as Fed chair. In the two years since he joined the Fed board, he’d become the first Fed chairman in three decades without any prior banking experience. He would face more objections from Democrats than any Fed chairman in history, yet end the year with his confirmation in the Senate.
He was not able to secure the support of Congress until he agreed to meet with Sanders and others to discuss what the Fed would do if he were not confirmed. As it turned out, there were few changes to policy once he took office.
Powell’s tenure as Fed chair is starting to look like a rare demonstration of the policymaking power of Fed chairmen.