Public Domain. Source: Federal Reserve
Jerome Powell, or “Jay,” is the 16th head of the Federal Reserve, charged with overseeing the nation’s money supply and financial system. Because of the Fed’s economic significance, the Fed Chair has been called the second most powerful person in the nation, with an outsized role regarding monetary policy. While our central bank is a hybrid system, with 12 regional Federal Reserve Bank Presidents, an Open Market Committee, and a powerful career staff, in reality there’s one voice that matters most: the Chairman’s.
Jay Powell grew up in Washington, DC, the son of an attorney and mathematician. He majored in politics at Princeton, then went on to get his law degree at Georgetown University. He worked on Wall Street and for the George H. W. Bush administration, before becoming a partner at the Carlyle Group, a private equity firm also based in Washington, DC. He’s an avid cyclist, often using his bike to commute from his home in Chevy Chase, Maryland to his office at the Fed’s Eccles Building.
Photo: Pedro Perez. Source: Morguefile
It’s reported that he’s worth over $100 million, which makes him the richest Fed Chair since Marion Eccles some 60 years ago. He’s been on the Open Market Committee since 2011, where he built a reputation as a serious, studious operator. During the debt-ceiling crisis of 2011, when Congress threatened to let the Government default, Powell spent a lot of time on Capitol Hill, tirelessly explaining the implications of a default or a delay in raising the debt ceiling.
Jay Powell is the first non-PhD to lead the Fed since Paul Volker. That doesn’t mean he’ll be a pushover for the academic Fed staff. When he first arrived at one policy center, they put him in a back office overlooking an alley. Powell didn’t complain. He just went to work, asking for more and bigger policy binders. He’s pretty comfortable, both in Washington and in his own skin. He doesn’t feel the need to promote himself. In fact, according to a former colleague at the Fed, Richard Fisher, he likes to do unglamorous jobs, working behind the scenes to build consensus.
Powell will lead a data-driven Fed, one more concerned with substance than style. In his first press conference as Chairman he was direct and to the point. He clearly had mastered the material, and seemed to tower over the young reporters who seemed to be cribbing questions from their undergraduate textbooks.
Source: St. Louis Fed
Policy errors may be responsible for most US recessions since 1945. But over the next five years, don’t expect them to come from the Fed Chairman.
Douglas R. Tengdin, CFA