It is no secret that we are poorly governed at the federal level. I believe that state and local governments are more responsive to their constituents. One of the obvious examples of poor governance can be found amongst those appointed by the president – and confirmed by the Senate – to run the federal departments and agencies. Some appointments have been weird, with there being little if any competence displayed by the appointee. Consider members of Biden’s cabinet: Deb Haaland the Secretary of the Interior, likely nominated so a Native American could be in the cabinet, or Xavier Becerra, the Secretary of Health and Human Services, nominated because he is Hispanic, or Pete Buttigieg at Transportation, nominated because he is gay, or Jennifer Grandholm at Energy, nominated I guess because she is a straight woman (or birthing person), or Denis McDonough at Veterans Affairs who is not even a veteran, or Marcia Fudge at Housing and Urban Development who probably has lived in a house and is from an urban area.

Two of the more controversial nominations were for banking agencies and both failed to get Senate confirmation. Sarah Bloom Raskin, nominated to the Federal Reserve as vice chair for supervision and Saule Omarova as Comptroller of the Currency (my old agency). Raskin was nominated because of her views on climate change. She had stated many times the view that the Fed should not allow credit to be given to companies that produce fossil fuels. Not surprisingly, this expansive view of the Fed’s role was not embraced by the Republicans or Joe Manchin who is from the coal producing state of West Virginia. The nomination of Omarova as Comptroller of the Currency was also rejected by the Senate. She had advocated the shrinking of large banks and the shifting of consumer deposits from banks to the Fed. The Comptroller of the Currency is the regulator of national banks – those banks that get their charter from the Federal government rather than the states. Omarova had also been critical of certain bank mergers and had advocated a federal takeover of the banking system. She was strongly opposed by both the large banks and the community banks.

Biden also nominated Fed chair Jerome Powell to another term as chairman and Prof. Lisa Cook of Michigan State University and Prof. Philip Jefferson of Davidson College to serve as Fed governors. Although both Cook and Jefferson have impressive academic credentials, neither is a monetary economist. Cook’s writings are primarily in African American studies while Jefferson has written extensively on poverty. However, the Fed is tasked with overseeing the financial system, conducting monetary policy and providing services to the banking system. It’s stated objectives are controlling inflation, pursuing targets of full employment and stability in exchange rates. Typically, Fed governors have come from the banking system, the financial system and academia. But the typical academic has had expertise in macroeconomics, international economics, monetary theory and or financial institutions. Those not versed in these areas find themselves overwhelmed by the sheer volume of data and statistics used by the Fed governors to make decisions within the scope of the Fed’s duties. Prior Fed governors who have lacked relevant expertise have not fared well and have resigned early into their tenure. I remember one appointee saying that he had studied monetary economics since his appointment and was now well versed in its nuances after a couple of weeks. A senior Fed staffer when asked about the statement called the new governor “scary.” Although several of the Federal Reserve regional banks have recently held seminars on the impact on financial institutions by such trendy social issues such as income inequality and climate change, I seriously doubt if either Prof. Cook or Jefferson will have the clout to change the focus of the Fed Board to embrace “wokeness”. It will be interesting to see if they try.