The Washington PostDemocracy Dies in Darkness

Opinion Biden must move faster to fill the three openings on the Federal Reserve board

The Federal Reserve building in Washington on Nov. 20. (Samuel Corum/Bloomberg News)
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President Biden has yet to name anyone to fill three key seats on the Federal Reserve Board. This is the most important economic policymaking institution in the United States — and many would say in the entire world.

It’s hard to imagine Mr. Biden would not act expeditiously to nominate someone if there were an opening on the Supreme Court. So why the delay in filling vacancies at the Fed?

When Mr. Biden announced last month that he would reappoint the steady and battle-tested Fed Chair Jerome H. Powell (a move this editorial board endorsed), the White House also put out a statement saying the president would announce his nominees for the other three spots “beginning in early December.” It’s now past the midpoint of the month and no further nominations have been made.

It’s difficult to understand why this isn’t an urgent priority for Mr. Biden. Inflation is running at a nearly 40-year high, which is spooking many Americans and is a key reason the president’s approval ratings have slumped. The Fed is the main line of defense against inflation.

And the nation is going to need that line of defense at full strength in 2022. As Mr. Powell warned Wednesday, “The risk of higher inflation becoming entrenched has certainly increased.”

The Fed signaled it expects to hike interest rates three times next year to counter inflation. Mostly, that means it will soon be more expensive to borrow money for a home loan, auto loan, business loan or other debt, which should dampen demand a bit. But it will be a tricky call when to start hiking rates — and whether more than three are needed.

Mr. Powell does not make these critical decisions on his own. The Fed has a policymaking committee, and the core of it is the seven members of the Fed’s Board of Governors. If Mr. Biden does not move swiftly to fill the openings, the Fed will soon be operating hamstrung with just four members.

Among the vacancies is the powerful vice chair for supervision, one of the top bank regulators in the country.

There’s a deep bench of strong candidates. Many names floated in the media are well known in economic and business circles. It’s time for Mr. Biden to make some decisions. The nominees will still have to be confirmed by the Senate before they can start their jobs, a process that can be lengthy.

The top priority for choosing any Fed leader must be credibility. Mr. Biden has also been clear that he wants to prioritize diversity. It’s the right call. In the Fed’s 107-year history, there have only been three non-White board members, all Black men. The track record for women isn’t much better: The Fed has only had 10 female board members in its history, according to data compiled by Kaleb Nygaard of the Yale Program on Financial Stability.

Another reason for diversity of views and backgrounds is a recognition that unemployment is almost always highest among Black people — and their jobs are the slowest to return to normal after a crisis. Black women were the hardest hit in the pandemic downturn.

Mr. Powell will need all hands on deck in 2022.