By Lindsay (NYSE:) Dunsmuir

(Reuters) – Even as Federal Reserve Chair Jerome Powell predictably dodged the latest question over his future as head of the central bank, his signal of openness to Democratic demands for tougher regulation of Wall Street under a new regulatory chief may assuage what critics see as a weak point in his leadership.

On Wednesday, Powell answered a question about how much he would trust a new vice-chair for supervision to supervise bank regulation.

That authority is respected and I will continue to set the regulatory agenda. Powell agreed. Powell added, “I would accept it and furthermore, I believe that it is only fair for a new individual to look at the existing state of regulation and supervision in order to suggest changes.” I welcome it.

The President could use this opportunity to work with Joe Biden on a package deal that would see Powell as the chair while Lael brainard, a Democrat who has been favored by progressives and take over the Fed’s regulatory czar position when it opens at the end-of October.

Some believe that Powell, an ex-private equity banker and former investment banker was too close to Wall Street. Also, the public declaration may work in his favor as both he and Randal Quarles have voted to relax regulations.

Jeff Hauser, the founder of Revolving Door, said, “I believe he’s likely to be the best politician ever to serve as Federal Reserve chairman.” However, the Revolving Door opposes Powell being renominated in favor of Brainard. It’s something he is truly good at.

Powell’s comment on regulation might also be helpful in bolstering his credentials, at a time where the White House examines the possibility of him being renominated for the post. His term ends February 31st.

TRADING FUROR

On paper, Powell remains the likely candidate for a second term. Bipartisan support is evident in Congress for Powell, who was reportedly backed last year by Janet Yellen (current U.S. Treasury secretary) and restructured the Fed’s approach to monetary policies to give more priority to a wide and inclusive maximum unemployment goal. This change was praised by many of his supporters, including labor-focused, progressive economists.

This is despite the fact that there are many problems, including the last week revelation that two Federal Reserve regional banking presidents engaged in controversial stocktrades. It’s not difficult to see where this could go wrong, especially since Elizabeth Warren, Democratic Senator, is a crucial lawmaker who demanded immediate action to create new ethics rules which would prohibit such deals in the future.

Powell stated that the Fed must change and that they will do so. Powell was also upset at the actions of Robert Kaplan (Dallas Fed President) and Eric Rosengren (Boston Fed President).

Powell added, “In terms confidence and this sort of thing I believe, no one’s happy.” Powell’s commitment to full-scale action convinced others less.

Dennis Kelleher, the president and chief executive of Better Markets and an advocate group advocating tighter financial regulation was part of the team that transitioned Kamala Harris and then-President-elect Biden.

He’s not making any changes to their shocking conduct. Instead, he has asked staff members to look at the code of conduct and make suggestions for future changes.