Who will chair the Federal Reserve after Yellen?

Runners and riders for the US central bank board

Janet Yellen was peppered with questions about her future at the Federal Reserve when she testified to Congress on Wednesday, and speculation is now rife about who could take over from her as chair if President Donald Trump decides not to reappoint her. This is the FT’s guide to the runners and riders.

And while the end of Ms Yellen’s first term as chair on February 3, 2018 looms the largest, the Federal Reserve Board is already in the midst of a period of sweeping change on its executive corridor. Click on each seat on the Fed’s seven-person Board of Governors to see what is likely to change.

Potential successors lining up
Seat not likely vacated soon

Chair

Janet Yellen

Term as chair expires 2018

Governor

VACANT

Governor

VACANT

Community banker

Nominee

Randal Quarles

Vice chair for supervision

Vice chair

Stanley Fischer

Term as vice chair expires 2018

Governor

Jerome Powell

Term as governor expires 2028

Governor

Lael Brainard

Term as governor expires 2026

© Bloomberg, Reuters

Janet Yellen, chair

Janet Yellen’s term as Federal Reserve chair ends on February 3 next year, and President Donald Trump has a team looking for her successor. Mr Trump attacked Ms Yellen on the campaign trail, accusing her of doing Barack Obama’s bidding by keeping rates low, but he has abruptly halted any criticism of the Fed since his inauguration.

Instead, Mr Trump has said he likes and respects Ms Yellen and refused to close down the possibility of reappointing her. While Ms Yellen’s term as chair is up for renewal in early 2018, her term as a governor on the Federal Reserve extends until January 2024. It is therefore possible, although unlikely, that she could stay on the board even if she did not win a second term as its chair.

Below are some of the potential contenders to replace her as chair.

Gary Cohn

Director of Donald Trump’s National Economic Council


Gary Cohn’s team at the White House’s National Economic Council is helping lead the hunt for the next Fed chair, but the NEC director is already being viewed as a leading contender for the post. Unlike Ms Yellen, Mr Cohn is not an academic economist, but the former Goldman Sachs banker has extensive markets experience. When asked about the Fed he has insisted he is “very happy” in his current White House position.

Kevin Warsh

Former Federal Reserve Board governor


Mr Warsh is a visiting fellow at Stanford University’s Hoover Institution and member of Mr Trump’s business advisory council. He served on the Fed’s board of governors during the financial crisis, when he was seen as a key interlocutor with a crisis-struck Wall Street for then-chair Ben Bernanke. A sceptic about quantitative easing, Mr Warsh has since been highly critical of the central bank. At a conference in May he called for a “fundamental rethinking” of the Fed’s strategy, tools, governance and communications in an address that appeared to some observers to be a campaign speech.

Glenn Hubbard

Dean of Columbia Business School, former chairman of George W Bush’s Council of Economic Advisers


Mr Hubbard has long been seen as a potential nominee for Fed chair under a Republican president, and was viewed as a contender for the post or that of Treasury Secretary had Mitt Romney won the 2012 presidential election. In an opinion piece in the Wall Street Journal in June he advocated the use of a policy rule to help set rates, a position advocated by many conservative economists. He also said new Fed governors should be chosen with “varied life experiences”.

John Taylor

Stanford University professor, author of the Taylor Rule for setting interest rates


Mr Taylor, who has also long been seen as a potential Fed chair, is revered in Republican circles for his authorship of the so-called Taylor Rule for setting interest rates. Congressional Republicans have been trying to force the Fed to pay greater attention to such policy rules as they seek to use legislation to trim the central bank’s discretion, but the Fed fiercely resists the idea. Mr Taylor’s past government positions included posts under both George Bush senior and junior.

Jerome Powell

Governor on the Federal Reserve Board


Mr Powell, who worked in the Treasury under George HW Bush, was appointed by Barack Obama to the Fed’s board of governors in 2012. A former investment banker and Carlyle Group partner, Mr Powell has emerged as a centrist on the Fed’s board when it comes to monetary policy. His work on the board has focused intensively on financial markets and financial regulatory matters.

Gregory Mankiw

Harvard University professor of economics


Mr Mankiw has also been discussed as a potential choice for Fed chair under Republican presidents in the past. He served as chairman of George W Bush’s Council of Economic Advisers from 2003 to 2005, and advised Mitt Romney when he was running for president. Mr Mankiw is seen as a centrist rather than a hard-money conservative when it comes to monetary policy, and he has been broadly supportive of the Fed’s crisis-era stimulus efforts.

Stanley Fischer, vice chair

Stanley Fischer’s term as vice chair of the Federal Reserve ends next year on June 12. His term as governor is not up until 2020, although it is not known if he plans to serve the full stint. Mr Fischer has been seen as occupying the hawkish end of the spectrum on the board. He is one of the most experienced central bankers in the Federal Reserve system, if not the world, having also run the central bank of Israel for eight years. As a professor of economics at MIT starting in the 1970s his students included former Fed chairman Ben Bernanke, Mario Draghi of the ECB, Gregory Mankiw, and Olivier Blanchard, the former IMF chief economist.

Jerome Powell, governor

Jerome Powell’s term as governor ends on January 31, 2028, and he has served as a governor since 2012. Known as one of the workhorses of the Federal Reserve Board, Mr Powell chairs five of its eight board committees and sub-committees. He is a centrist on monetary policy who took over responsibility for financial regulation when Daniel Tarullo departed the Fed in April. He served at the Treasury under George HW Bush, focusing on financial institutions and the Treasury debt market, and worked extensively on markets matters as a Fed governor.

Lael Brainard, governor

Lael Brainard’s term as governor ends on January 31, 2026. She has served on the board of governors since 2014. Formerly a senior official at the Treasury under Barack Obama, Ms Brainard was widely seen as a potential Treasury Secretary if Hillary Clinton had won the presidential election. She has occupied the more dovish end of the spectrum at the Fed. She has warned against excessive tightening because of residual slack in the jobs market and the risk that overseas shocks ricochet back to the US via highly integrated capital markets.

Vacant, governor

Marvin Goodfriend

Professor of economics at Carnegie Mellon University, former Richmond Fed official


Mr Goodfriend is Mr Trump’s preferred candidate for one of the other vacant board seats, but he has yet to be formally nominated. He has been seen as a conservative on monetary policy, in part because of his backing for the use of stricter policy rules when setting rates. He has also warned about purchases of mortgage-backed securities in quantitative easing. However Mr Goodfriend’s interests also include the use of negative interest rates as a tool for stimulating growth, suggesting he is not ideologically opposed to activist monetary policy.

Randal Quarles, nominee, governor - vice chair for supervision

The vice chair for supervision is a position that was created in 2010 under the Dodd-Frank Act but has not yet been filled. Former Fed governor Daniel Tarullo unofficially handled vice chair for supervision duties until he resigned from the Fed board in April 2017. If approved, the nominee will serve as vice chair for supervision for four years.

Randal Quarles

Private equity founder, former under secretary of the Treasury in the George W Bush administration


Mr Quarles was named as Donald Trump’s nominee to be vice chairman of financial supervision at the Federal Reserve Board on July 10. His candidacy was welcomed by bankers hoping for an easing of the Fed’s tough approach to post-crisis regulation, but he is seen as a pragmatist rather than an ideological opponent of regulation. His advocacy of policy rules to help set interest rates may put him into opposition with existing Fed governors including Janet Yellen.

Vacant, governor - community banker

A piece of legislation enacted in 2015 requires that one of the seven Federal Reserve Board members demonstrate experience in or overseeing community banks that have less than $10bn of assets. The Trump administration has been seeking a governor for one of the vacant seats who fulfils this criteria, but it has not been easy for it to find a suitable nominee.

To participate in this chat, you need to upgrade to a newer web browser. Learn more.