SAN FRANCISCO (Reuters Breakingviews) - If President-elect Joe Biden were picking the next U.S. Treasury secretary on progressive credentials, Lael Brainard might seem a shoo-in. A career economist and Federal Reserve governor she has been vocal about financial inclusion and the risks of climate change. In the end, it may be a Republican-dominated Senate that gets the final say over who oversees the national finances. She would then be a less obvious pick – but still a good one.
Brainard’s more left-friendly views are there in plain sight. She opposed the move to reduce Volcker rule compliance requirements for big banks in 2019. She also led the revamp of the Community Reinvestment Act, which protects low-income neighborhoods from being shunned by banks. And when the Fed told big lenders to stop share buybacks in order to save capital, she said they should have gone further, and stopped dividends too.
Brainard’s resume includes establishment-friendly moments, though, which may alienate ideologues on both sides. She oversaw international affairs at the Treasury under President Barack Obama, during which time the department declined to officially censure China for manipulating its currency. She also championed free trade agreements like the Trans-Pacific Partnership.
Among a Treasury secretary’s main tasks are to coordinate smoothly with the many U.S. financial regulators, and be ready to deal with crises. Brainard has done both, as have other Treasury contenders Roger Ferguson, the outgoing head of the Teachers Insurance and Annuity Association of America, and former Fed Chair Janet Yellen. The Fed’s CRA proposal is aimed at bridging divisions among other regulators also involved in oversight of that rule. At Treasury, she helped lead the government’s global response to the Great Recession. She gave early warnings about the possible spread of the Greek debt crisis and pressured Europe on a stronger rescue plan for the region.
Even for Wall Street, Brainard could also be a Goldilocks choice. Unlike current post-holder Steven Mnuchin, she isn’t a former bank employee – though did work at consulting firm McKinsey. And despite supporting tougher regulation, she is not a firebrand calling for banks to be broken up.
That could make her more palatable to Republicans in Congress, who may have the majority in the Senate when its final makeup is settled in January. Even if not, agreement between progressive and more centrist Democrats isn’t guaranteed. Economic smarts, a social conscience and political pragmatism would make Brainard a solid choice either way.
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