Federal Reserve Governor Lael BrainardThe increased influence of the United States will likely bring about significant changes to and difficulties for its banking system.

Brainard, who is considered a progressive, favors tighter control on financial institutions and Wall Street giants, should be prominently represented by President Joe Biden as he weighs the options for who will lead the central bank or who will oversee banks.

In the coming months, it is expected that she will get one or both of these jobs.

According to economist Ed Yardeni of Yardeni Research, “Everyone can see that Fed is moving towards a more progressive position, so it would not surprise to see her get more power as Fed chair, or vice-chair for regulation.” “As the Fed has always been more focused on monetary policies than regulation, it now has one new mandate from progressives: to regulate the banks more.

These issues were brought to sharp focus by Sen. Elizabeth WarrenD-Mass., a prominent progressive and an ex-candidate for the presidency, called current Chairman Jerome Powell “dangerous”Because of Fed’s decision to relax bank regulations.

Warren declared then she would not support Powell’s election. Powell’s term is up in February. However, Biden will likely make a decision much sooner than that.

Multiple reports suggest that Brainard is a strong choice for Warren. However, the senator hasn’t publicly committed. Brainard has not responded to requests for comment.

“The question now is whether there will be a renomination Fed Chair Powell. Warren stated this in an interview with CNBC earlier this week. “I don’t want to discuss other nominees.”

Betting markets aren’t expecting a shift at the Fed’s top rung, for what it’s worth. PredictIt estimates Powell has a 73% chance to be confirmed by Senate. Brainard only 18%.

Powell is also supported by enough senators to pass the banking committee, and make it to the House floor. a report from Bloomberg News

Brainard, even if she doesn’t get the position of chair, can still be an influencer on banks. She is a strong candidate to become the vice-chair for supervision, which Randal Quarles will not be able to retain when his term ends this month.

According to Tom Graff of Brown Advisory, the head of fixed income, “The assumption is that if Powell gets renominated that Brainard will not only be vice-chair for supervision, but that also she will receive a reasonable amount free hand.” Brainard will be stronger and more rigorous than Quarles.

Her influence is most likely to be felt in three key areas: Climate change and the creation of a digital currency at the central bank. This latter topic is known in the banking sector as “countercyclical capital buffers”. which Brainard supportsAnd Quarles has opposed

The third issue will take banks back to pre-high-risk finance days, but the first two issues are new waters. A study by the Fed on this topic will be released soon. the viability of a Fed-backed digital dollar,Brainard was a staunch advocate for the legislation, while some officials were less convinced.

Brainard’s special interest is in the area of climate change.

She spoke on Thursday a speech discussing “climate scenario analysis,”It was essentially an attempt to encourage institutions to plan for financial risk from climate-related issues. She also discussed stress testing banks to assess climate risk.

She stated that this planning must include “consistent and comparable” disclosures about climate. This indicates that banks will eventually be required to account for threats.

Together, these efforts will help to ensure the financial system’s resilience to climate-related risk and be well-positioned for the transition towards a sustainable economy, she stated.

She has been a leading voice in monetary policy and supported low interest rates. Former Chair was seen in her as an ideological friend. Janet Yellen – now Treasury secretary – so much so that Fed watchers considered Brainard’s speeches as reliable proxies for where Yellen stood on monetary policy.

This Fed leadership scandal comes at a time when there has been ethical chaos. Two regional presidents of the Fed, Eric Rosengren in Boston and Robert Kaplan in Dallas, have resigned after being exposed as having inappropriate behavior. were making large trades in their individual investment portfolios. In news reports, Richard Clarida (Vice Chairman Federal Open Market Committee) was also mentioned. executed trades on the eve of a Powell speechFebruar 2020

Brainard, like other Fed officials has kept mum about the subject as handicapping over the direction of the central bank continues.

Graff, a strategist for Brown Advisory, stated that Powell represented the White House’s least-expensive option. This story may change politics if it continues to be salient and adds oxygen to Warren’s argument that he does not supervise closely his people or banks. [Biden’s] decision.”