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Saturday 24 August 2019

Jerome Powell brings gift for forging consensus to role as new Fed chief

Federal Reserve board member Jerome Powell speaks after US President Donald Trump announced him as his nominee for the next chairman of the Federal Reserve (AP Photo/Pablo Martinez Monsivais)
Federal Reserve board member Jerome Powell speaks after US President Donald Trump announced him as his nominee for the next chairman of the Federal Reserve (AP Photo/Pablo Martinez Monsivais)

New chairman of the US Federal Reserve Jerome Powell is not a trained economist, has produced no trail of research, and has built a fortune as an investment manager.

Yet by the reckoning of Fed analysts - those who know him and those who do not - Mr Powell is equipped to lead the world's most influential central bank, presiding over a US economy on solid ground but hardly without risks.

What the 64-year-old brings to the position most of all, they say, are a formidable intelligence, an appreciation of intellectual diversity and a gift for forging agreement. And in five years on the Fed's board of governors, he has schooled himself in monetary policy while becoming a specialist in areas from banking regulation to the US payments system.

A moderate who is expected to follow the cautious approach to interest rates of the current Fed chair, Janet Yellen, Mr Powell could serve as a steadying force for the US economy as well as a unifying figure among the central bank's policymakers. As a Fed governor, he has never dissented from a central bank decision.

"A consensus builder" is how Shai Akabas, who worked with Mr Powell at the Bipartisan Policy Centre, a public policy think-tank, describes him. For two years Mr Powell was a visiting scholar at the centre, where, among other things, he focused on helping avert a crisis over raising the government's debt ceiling, until he joined the Fed's board in 2012. While at the think-tank, it was his task to help convince congressional Republicans - successfully, in the end - that a default on the debt would amount to a catastrophe.

Mr Akabas observed that Mr Powell "was always trying to glean insights from those around him - and use that to form opinions".

Educated at Princeton University with a law degree from Georgetown, Mr Powell, known as Jay, spent many years in investment management - at Dillon Read and then at the Carlyle Group. His work there made him one of the wealthiest figures to serve on the Fed board: his most recent financial disclosure form places his wealth at between 19.7 million dollars and 55 million dollars. And based on how government disclosures are drafted, his wealth may actually be closer to 100 million dollars.

Yet those who know him describe a man of unshowy modesty, with little discernible pretension. Earlier this year at Reagan National Airport, Matthew McCormick, a government economist, who was travelling with him, said he watched Mr Powell carry a car seat and luggage for a family he saw struggling to catch a connecting flight.

At the Bipartisan Policy Centre, founder Jason Grumet recalled that the organisation did not know what to expect from Mr Powell, who had just finished several lucrative years at the Carlyle Group and had earlier held a high-level Treasury Department post. Yet he was content to take an unassuming office near the photocopier with a view of an alley.

"Jay dug in with the intensity of a young analyst," said Mr Grumet. "He was like a junior staffer."

A Washington native, Mr Powell has long shown an impulse toward federal policy and service. Early in his career at Dillon Read, he followed Dillon's former chairman, Nicholas Brady, to President George HW Bush's Treasury Department. Mr Brady had become Treasury secretary, and Mr Powell became undersecretary for finance.

His work at the Bipartisan Policy Centre followed later in his career, and it led to his nomination by President Barack Obama to the Fed's board.

In contrast to Mr Powell, his predecessors, Ben Bernanke and Ms Yellen, were nationally distinguished economists before their Fed chairmanships, with decades of research, papers and books attached to their names. In theory at least, they came to the Fed job prepared to lead the central bank's response to unforeseen economic crises. No-one knew, after all, that Mr Bernanke would have to endure the stomach-churning threat to the financial system that forced him to preside over a raft of emergency actions to save the largest banks and, by extension, the economy.

What colleagues do know about Mr Powell is that he is unlikely to hesitate to rely on colleagues or advisers with deeper expertise. He is described as someone who believes deeply that differing opinions and backgrounds can help build common ground in public policymaking.

In a speech last year, he took note of the value of having 12 Fed branches spread across the country, suggesting that regional differences provide an array of views to help produce superior monetary policy.

"My strong view is that this institutionalised diversity of thinking is a strength of our system," he said. "In my experience, the best outcomes are reached when opposing viewpoints are clearly and strongly presented before decisions are made."

Mr Powell, who projects a serious demeanour, is known for a lighter side as well. Friends say he strums rock and blues numbers on the guitar, and he has been an avid golfer despite back pain.

He will even bring a dose of showbusiness with him to the Fed. His wife, Elissa Leonard, who has worked in the film industry, is executive producer of a film called Ladies In Black.

IMDB describes it as "an alluring and tender-hearted comedy drama about the lives of a group of department store employees in 1959 Sydney (Australia)".

Mr Powell also appears to take music seriously.

Alan Tonelson, a longtime commentator on international trade, attended Princeton with him. In the autumn of 1971, while playing cards with a group of students in a freshman dormitory, Mr Powell suggested they listen to an album by a group called Dan Hicks And His Hot Licks.

"Dan Hicks sucks," Mr Tonelson shot back.

Four decades later, Mr Tonelson reconnected with Mr Powell after his appointment to the Fed. Mr Powell looked at him and deadpanned: "Dan Hicks And His Hot Licks, huh?"

"I was blown away," Mr Tonelson said. "That stuck with him."


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