Powell would be the richest chair since the 1940s
In 2011, when Republicans were threatening to force the government to default on its debt if the party’s policies were not adopted, they found support in a flashy, wealthy businessman: Donald Trump.
“The Debt Limit cannot be raised until Obama spending is contained,” he tweeted.
A countervailing voice came from a wealthy, mild-mannered businessman who had left the world of high-finance to work for a $1 a year for one of Washington’s quiet think tanks. Jerome Powell, a former Carlyle Group executive and investment banker who had served a stint in the George H.W. Bush administration, traveled around Capitol Hill with a large binder from the Bipartisan Policy Center, urging Republicans to understand the risks of a default on the economy.
“He was the right person at the right time,” says Jason Grumet, president of the Bipartisan Policy Center. “Powell brought a credible, factual presentation to Capitol Hill that allowed him to be effective despite the aggressive politics at the time.”
Now Trump, a combative politician who has tried to upend the
institutions of Washington, has nominated Powell as the new chairman of the Federal Reserve, where he currently serves as a governor. Fed chair is the top job steering America’s economy, and, according to people familiar with the process, Trump decided to tap Powell for it after deciding against renominating the current Fed chair, Janet Yellen, or going in a sharply different direction by tapping Fed critics John Taylor or Kevin Warsh for the job. Prior presidents had typically re-nominate the sitting Fed chair, especially when the economy was doing well.
In some ways, though, Powell, who goes by the nickname “Jay,” fits the mold of a typical Trump pick for a premium post. He’s a Republican who built vast wealth as a partner at Carlyle. Powell’s latest financial disclosure from June lists his net worth between $19.7 million and $55 million. If he gets the job, Powell would be the richest Fed chair since banker Marriner Eccles, who held the position from 1934 to 1948, according to Washington Post reviews of former Fed chair financial disclosures and former Fed historian Gary Richardson.
Powell has developed a reputation in Washington as a consensus builder who prefers to operate behind the scenes. President Barack Obama felt comfortable enough with Powell to nominate him to the Fed board in 2012, renominating him again in 2014.
“I never saw him lose his temper,” says Richard Fisher, the former president of the Federal Reserve Bank of Dallas, who sat next to Powell at many Fed meetings and had dinner with him from time to time. “Jay doesn’t promote himself like so many do in Washington. He likes to do the unglamorous jobs.”
After joining the Fed in 2012, Fisher says Powell continued to quietly travel to Capitol Hill to soothe Republicans, some of whom felt the Fed had erred by cutting interest rates to zero and purchasing trillions in assets after the financial crisis. Powell worked closely alongside Yellen, a Democrat, to keep interest rates low in recent years and defend the Fed’s actions.
Powell’s widely expected to keep Yellen’s tactics largely in place, albeit with a bit more of a Wall Street touch.
Powell is a lawyer, not a PH.D. economist like Yellen and the two prior holders of the post before her: Ben Bernanke and Alan Greenspan. But people who worked with Powell at the Fed say he has done everything he can in the past five years to learn the technical details of the Fed and macroeconomics.
“When he showed up at the Fed, he basically did not know much,” says Seth Carpenter, chief U.S. economist at UBS who spent 15 years at the Fed, including time overlapping with Powell. “He made a conscious decision to spend a lot of time with staff and colleagues to learn as deeply and completely as possible.”
Despite his wealth, friends and former colleagues of Powell’s describe him as “annoyingly normal.” He lives in Chevy Chase, Md., and often rides his bike about 8 miles from home to the Fed. He doesn’t drink much, plays golf and the guitar and has an odd ability to repeat people’s sentences backward to them, a quirk former colleagues say is a reminder of his smarts – and how closely he listens.
Powell is expected to easily clear the Senate if Trump does nominate him for the post.