5 Things You May Not Know About Jerome Powell, Chair of the U.S. Federal Reserve
Jerome Powell, chair of the Federal Reserve Board of Governors, testifies at a House Coronavirus Subcommittee hearing on June 22, 2021, in Washington, D.C. (Photo by Graeme Jennings-Pool/Getty Images)
Despite the U.S. Federal Reserve’s influence over financial markets worldwide, “It is the most powerful and least understood institution in the country,” financial journalist Dion Rabouin told FRONTLINE in the new documentary The Power of the Fed.
A 2014 Pew Research survey found that only 24% of respondents could identify the Federal Reserve Board’s then-chair, Janet Yellen. And in a May 2020 survey, conducted by Ipsos/Axios during the leadership of current chair Jerome Powell, 51% of respondents said they did not trust the nation’s central bank to look out for their best interests.
For Powell, 68, taking on the role of chair of the Federal Reserve Board of Governors, the central bank’s main governing body, in February 2018 has given him both formal and informal power over the economy. He heads the committee that sets monetary policy in the U.S., determining interest rates and the use of experimental practices, such as those at the heart of The Power of the Fed. And his public statements can send financial markets dipping or spiking, as investors try to predict what the Fed will do next.
To shine some light on the Fed chair, here are five things you might not know about Jerome Powell.
1. Powell has served under four presidents, both Democrat and Republican.
Powell’s history of public service dates back to the 1990s. He was appointed an assistant secretary and then under secretary of the U.S. Treasury by President George H.W. Bush. In the latter role, Powell helped investigate the investment bank Salomon Brothers for manipulating the treasury bond market, which led to the firm paying $290 million in fines and restitution.
Powell later returned to the private sector, until President Barack Obama appointed him to the Fed’s Board of Governors in 2012. In 2017, President Donald Trump nominated Powell to a four-year term as Fed chair, succeeding Yellen. The Senate confirmed Powell’s nomination in early 2018 by a bipartisan vote of 83 to 14.
2. He is the first non-economist to become the Fed chair in 40 years.
Powell was a broadly uncontroversial pick for Fed chair, with one Wall Street player — Ward McCarthy, of the investment bank Jefferies — telling CNBC he was the “boring” choice.
But by at least one measure, Powell was unusual: He is the first Fed chair since 1981 without a graduate education in economics.
Instead, Powell cut his teeth in the private sector, working for investment banks before and after his stint in the Treasury Department. He quit his position at Bankers Trust in 1995, after the bank became embroiled in a trading scandal that cost its clients hundreds of millions of dollars. Powell was not named in lawsuits or SEC actions launched in response to the scandal.
He worked in private equity before joining the Bipartisan Policy Center, a Washington, D.C., think tank, in 2010 and then the Fed in 2012.
Powell’s career in finance also made him the wealthiest Fed chair nominee since 1948, The Washington Post reported in 2017. At that time, Powell was worth between $19.7 million and $55 million, according to financial disclosures reviewed by the Post.
3. As a private citizen, Powell worked to prevent a federal default.
While at the Bipartisan Policy Center, Powell played a role in brokering a 2011 agreement to raise the federal debt ceiling, allowing the U.S. government to borrow more money and to avoid defaulting on the nation’s debt — a consequence some economists said would have wrought havoc on the world economy.
At the time, Republicans in Congress were holding up a debt-ceiling bill while demanding spending cuts. Powell had no formal role in government, but he took to walking around Capitol Hill with a binder from the Bipartisan Policy Center, trying to convince members of Congress of the dangers of default. He gave a presentation to lawmakers, explaining that, without raising the debt ceiling, the government at times would have to pause all payments, including social security checks.
A compromise bill raising the debt ceiling eventually passed the Senate and the House by wide margins, despite continued opposition from Tea Party conservatives and some progressive Democrats, CNN reported at the time.
4. Before COVID, Powell had expressed skepticism of experimental Fed policies.
To try to avert economic crisis when COVID-19 struck, Powell has presided over a massive spike in quantitative easing: the unconventional monetary policy in which nations’ central banks buy up securities, aiming to inject money into the economy, as examined in The Power of the Fed. Since March 2020, these asset purchases have added trillions of dollars to the Fed’s balance sheet.
The Fed first deployed the policy in response to the 2008 financial crisis. Powell was on the Fed board during Obama’s second term, when the Fed maintained near-0% interest rates and deployed quantitative easing following the crash.
But he has also voiced concerns about the continued use of quantitative easing. In a 2012 Federal Reserve committee meeting, Powell said the policy could encourage investors to take irresponsible risks, knowing the Fed would be there to inject money if their bets failed.
“Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so,” Powell said. “The market in most cases will cheer us for doing more. It will never be enough for the market. Our models will always tell us that we are helping the economy, and I will probably always feel that those benefits are overestimated.”
And in 2018, as the economy boomed, the Powell-led Fed responded by raising interest rates. Investors reacted poorly, causing market declines that infuriated President Trump. The Fed reversed course in 2019, repeatedly cutting interest rates.
More recently, Powell has endorsed quantitative easing as a continued economic response to the pandemic. In January, he said the Fed would continue buying securities until the economy had made “substantial further progress.”
“When that happens — and we can see that clearly — we’ll let the world know,” Powell said. “We will communicate very clearly to the public and we’ll do so well in advance before actively considering any tapering of asset purchases.”
5. Powell becomes JPow, chair of the Federal Meme Reserve.
Federal Reserve chairs do not typically hit it big among the 18- to 30-year-old demographic. But Powell has been an exception.
As The Power of the Fed finds, COVID-era quantitative easing has sparked a stock market boom that also boosted the popularity of trading apps. While young investors, flush with stimulus checks, began pouring money into the markets, forums such as Reddit’s WallStreetBets began crafting memes about both Powell — or “JPow,” as he’s known to online fans — and the Federal Reserve, which they credit with keeping the rally rolling.
One in particular, an animation titled “Money Printer Go Brrr,” shows Powell printing endless dollars. The meme has more than 1.2 million views on YouTube.
Powell declined a request from FRONTLINE to be interviewed for The Power of the Fed.