Jerome Powell, a member of the Board of Governors of the Federal Reserve, and President Trump’s nominee to take over from Janet Yellen as the chair of that board, testified before the Senate Banking Committee on November 28. There were no fireworks, and since Powell is eminently qualified, he is expected to sail through the confirmation process.

As to those qualifications: Powell received a law degree from Georgetown in 1979. He was Undersecretary of the Treasury under President George H.W. Bush, with responsibility for policy on financial institutions and the Treasury debt market. He has also been visiting scholar at the Bipartisan Policy Center, where his work focused on federal and state fiscal issues. He now has more than five years of experience on the Fed board.

At the Banking Committee hearing Tuesday, his opening statements stuck to the non-controversial. It has been a “great privilege” to serve under Chairman Bernanke and Chair Yellen, he said, and if he succeeds them he will do everything in his power to achieve the goals mandated by Congress forty years ago (maximum employment and price stability) while “preserving the Federal Reserve’s independent and nonpartisan status that is so vital to their pursuit in our democracy.”

Right Wing View

The hearing did involve discussion of the tricky question of the Fed’s balance sheet. Powell said that it is at about $4.5 trillion at present. He wants to shrink it, by “allowing securities as they mature to roll off passively,” over the next three or four years, but he expects that its next equilibrium will still be larger than it was before the crisis of 2008. The new equilibrium will be “in the range of” $2.5 to $3 trillion.

This might be considered a “conservative” sentiment both in the sense that Powell has positioned himself as a steward of the ongoing Yellen policy, not as someone who plans any sharp departures, and in the sense that shrinking the balance sheet, even in a measured way, is a money-hardening stance, if not exactly a “hard money” stance.

Powell also positioned himself to the right of center when he was asked about the regulatory part of his job. Senator Elizabeth Warren (D-MA) asked about the rules protecting people from predatory bank behavior and Powell responded, “Honestly, Senator, I think they’re tough enough.”

On the question of whether many banks are still “too big to fail,” Powell expressed the sensible view that it isn’t size alone that matters. It is the degree and manner of connectedness that makes failure a threat. “Size is only one indicator of the riskiness of a firm and the possibility of it damaging the financial system through its failures.”

Left Wing View

Some in the center left have suggested that Powell’s service at the Treasury Department during the period of the first President Bush could be a virtue, because at that time he had to deal with a crisis at Salomon Brothers that may be a harbinger of crises to come, and he did so satisfactorily.

Matthew Yglesias, writing at Vox, said that Powell isn’t “crazy or corrupt in some obvious way,” and this in itself makes him seem an unlikely choice from President Trump.  Yglesias also extends Powell praise a little bit less back-handed than that, writing with approval of the way that Powell emerged in the Bush I years as a “Republican validator for the view that failing to raise the statutory debt ceiling would be reckless and economically destructive.”

But what the left (from far to center) doesn’t like about Powell is simply that he is far too much a creature of the corporate elite. During the hearing, Sen. Sherrod Brown (D-OH) complained that he has met with Wall Street CEOs far more often than he had met with representatives of consumer groups.

One twitter denizen made the same point with a mix of irony during Powell’s testimony, tweeting that the Fed “prides itself in its diversity” because some members are from Goldman Sachs, while others hail from Citigroup.