What is the Federal Reserve?
Throughout history — from fossil fuel divestment to Civil Rights to Marriage Equality — any massive policy change was sparked by movements of ordinary people. The Federal Reserve itself was established in response to the 1930s Great Depression and labor movement. It’s our time to redesign the Federal Reserve and our economy to work for all of us.
We’re demanding the Fed steer relief funding towards racial and economic justice, including money, resources, and services to Black, Indigenous, and communities of color most historically marginalized.
What is the Federal Reserve Bank?
The Fed is the central bank of the U.S. (in other words, it’s the bank for banks). The Fed supervises the nation’s largest banks and provides financial services to the U.S. government. It also promotes the stability of the economy as a whole.
What does the Federal Reserve do?
The Federal Reserve has four functions:
- Manage inflation. As part of this function, the Fed also provides maximum employment and ensures interest rates are stable over time.
- Supervise and regulate the nation’s largest banks to protect consumers.
- Maintain the stability of the financial markets and constrains potential crises.
- Provide banking services to other banks, the U.S. government, and foreign banks.
The Faces of the Federal Reserve
Biden’s U.S. Federal Reserve Nominees
As businesses shuttered, stay-at-home orders took effect and COVID-19 took a deadly toll across the nation – the U.S. economy suffered a dramatic downturn. The Federal Reserve, the U.S. Central Bank leaped into action and pumped over $1.3 trillion dollars into the economy.
The Federal Reserve led by Chairman Jerome Powell rolled out the red carpet for Wall Street, Big Banks, and failing fossil fuel companies to take advantage of all-time low lending rates and relaxed regulations. At the same time, Main Street and everyday people suffered as the Federal Reserve imposed stiff regulations on cash-strapped municipalities and states while Covid relief packages stalled in Congress.
Now entering year 3 of the pandemic, the Federal Reserve remains a critical player in digging the U.S. economy out of the trenches as inflation rises and unemployment looms. And the Federal Reserve plays a key role in not only mitigating the economic impacts of the COVID-19 crisis but the ever-growing threat of the climate crisis.
In recent weeks, the Federal Reserve has gotten a makeover with the most diverse and climate conscious Board of Governors ever appointed– we must seize this opportunity and demand that the new leadership at the Fed brings both climate and equity to the forefront.
Meet the New and Familiar Faces at the Federal Reserve
Jerome Powell Chairman, Federal Reserve Board of Governors- On November 22nd, President Biden announced the renomination of Jerome Powell as Chair of the Federal Reserve Board of Governors. 350 US was an outspoken critic of Jerome Powell as his efforts during the COVID-19 crisis propped up flailing fossil fuels companies. Chairman Jerome Powell engineered bailouts that resulted in over a hundreds of billions of dollars of loans to fossil fuel companies such as Chevron, Exxon, and BP. While everyday Americans waited for relief, Jerome Powell relaxed regulations making it easier for failing fossil fuel companies to continue fueling the climate crisis. When asked about his climate policy earlier this summer, Powell stated, ‘that climate change was not the main factor in the Fed’s decision making”. Due to pressure from leaders like AOC, Senators Warren and Merkley and the progressive movement demanding stronger climate action from the Federal Reserve, Jerome Powell has spoken out about the importance of climate change in financial regulation and signaled his support for climate stress tests and other measures. Yet, Chairman Powell to date has not taken concrete steps to address the climate crisis at the Federal Reserve.
Lael Brainard Vice-Chair Federal Reserve Board of Governors- Along with Chairman Powell’s reappointment, Biden announced the reappointment of Federal Reserve Governor and elevated Lael Brainard to Vice-Chair of the Federal Reserve. Brainard has served on the Board of Governors since 2014 and previously served at the U.S. Treasury. Brainard has been an outspoken champion of addressing the climate crisis and the wealth gap at the Federal Reserve. Brainard has dissented and broke rank with her Federal Reserve colleagues 20 times at efforts to loosen bank regulations.
Last October in efforts to stop the US from falling behind other Central Banks she sounded the alarm on the fed’s inaction and is working to launch a climate stress test and scenario analysis to identify risks that the climate crisis poses to the financial sector.
Brainard has also been a pioneer in working to close the wealth gap and uplift the middle class. The Vice-Chair has also championed strengthening the Community Reinvestment Act (CRA) which mandates that banks reinvest in their communities and extend lending opportunities to low income and minority borrowers. Brainard is committed to ensuring that the CRA stays true to its mandate and has worked to bring stakeholders together to reform the CRA.
Sarah Bloom Raskin is a former Federal Reserve Governor and previously served as the Deputy Secretary Treasurer under the Obama administration. As the Vice Chair for Supervision, Sarah Bloom Raskin will be charged with developing policy recommendations for financial institutions. She is a professor at Duke University and has a substantial background in climate and sustainable finance.
Bloom Raskin has been championing the Fed to make up for the last four years and catch up to its European counterparts on reigning in the risks from the climate crisis. Raskin admonished the Federal Reserve for not initially joining the Network of Central Banks and Supervisors for Greening the Financial System — a move that the Fed Reserve made shortly after the election formally joining the organization of 75 central banks.
Bloom Raskin believes that financial regulators have substantial power to mitigate the climate crisis.
Lisa Cook – is a groundbreaking economist. She has made history by becoming the first Black woman to join the Federal Reserve Board of Governors. She served in the Obama administration as a senior economist at the Council of Economic Advisors.
Growing up in Millegeville, GA under the shadow of segregation, Cook was drawn to exploring the economic impacts of systemic racism. She is a fierce crusader for recognizing the devastating consequences of entrenched bigotry and has written about the loss of innovation and stagnation of the economy due to hate-related violence. As Black unemployment is still recovering from the shocks of COVID-19 we anticipate that Lisa Cook will continue to elevate the issue of racial equity in regulating our financial institutions.
Philip Jefferson is a veteran of the Federal Reserve having served as an economist for the Federal Board of Governors as well as the New York Federal Reserve Regional Branch. His research explores inequality and the role of education and poverty. He currently serves as the Vice President for Academic Affairs and Dean of Faculty at Davidson College. Jefferson is the fourth Black man to serve on the Federal Board of Governors in U.S. history.
The Federal Reserve now is the most diverse and progressive it’s ever been in the history of the United States and is charged by the Biden administration to make climate a top priority. We must ensure that the leadership at the Federal Reserve takes swift and concrete action to protect our financial system from the shocks of the climate crisis and begin to reign in fossil fuel finance and work towards a sustainable future and just transition.