Hon. Michael Crapo, Chairman Banking, Housing & Urban Affairs Committee United States Senate 534 Dirksen Office Building Washington, DC 20510

Hon. Sherrod Brown, Ranking Senator Banking, Housing & Urban Affairs Committee United States Senate 534 Dirksen Office Building Washington, DC 20510

October 25, 2017 Dear Senators, We write to express our strong interest in the process for appointing and confirming members of the Federal Reserve Board of Governors. The Federal Reserve is our country’s most powerful economic policymaking institution, and the decisions made by Fed officials will play a huge role in determining whether members of our communities continue to experience recovery from the devastating financial crisis and Great Recession. Following the resignation of Federal Reserve Vice Chair Stanley Fischer from the Fed’s Board of Governors effective October 13th, President Trump has the power to fill four vacancies, comprising a majority on the Board. Not since 1936 has a president had this much power to shape the Fed’s composition, and therefore to determine our economic future. The Fed is tasked with pursuing maximum employment, and under the leadership of current Fed Chair Janet Yellen, Fed officials have prioritized this mandate, keeping interest rates low to allow for the creation of millions of jobs. Chair Yellen and her fellow governors at the Fed have done more than any other policymaking institution to facilitate economic recovery. In our cities, we are starting to see the difference. Jobs are returning and wages are rising. Their work is far from complete, however. The Fed has still not fulfilled its full employment objective, stark racial disparities in unemployment and wages persist, and too many workers who want full-time work are unable to find it. Because the economic recovery remains so fragile, what happens next at the Fed is of paramount importance. For the job she has done managing our economy, enacting strong financial protections, and facilitating economic recovery, we believe Chair Yellen deserves re-appointment. We hope that you will use your voice to advocate for Chair Yellen’s reappointment as well. If she is not re-appointed, however, we hope that you will carefully scrutinize the record of her replacement, as well as all nominees to the Board of Governors. The Senate must reject nominees who:  

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Have criticized the Fed’s full employment mandate and called for its elimination or deprioritization Seek to constrain job growth by advocating for the Fed to follow a strict, rules-based approach to monetary policy (e.g. the Taylor Rule, named for Stanford economist John Taylor, which economists estimate would have cost 2.5 million jobs had it been in effect in the Fed over the past five years) Have a track record of advocating for reduced support for the economy even during the depths of the Great Recession Would unwind the financial protections enacted by Yellen and her peers.

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Unfortunately, President Trump’s first confirmed appointee to the Board of Governors, Randal Quarles, fell short of these criteria. He has advocated for tying the Fed’s interest rate policy to a strict Taylor Rule, and pledged to weaken protections that the Fed put in place after the 2008 financial crisis. Another likely nominee to the Fed, Marvin Goodfriend, has called the Fed’s full employment mandate “incoherent,” and does not believe that Fed policy can reduce unemployment. The presumed frontrunner to replace Yellen -- Kevin Warsh -- served on the Fed’s Board of Governors during the last crisis. Even as financial instruments like credit default swaps were causing the risky investments that led to the crisis, Warsh was praising their use in the mortgage markets and championing deregulation. After the crash, Warsh warned about the risks of inflation even as unemployment was at crisis levels, and called for a premature end to the Fed’s efforts to stimulate the economy. Taylor, Goodfriend, and Warsh would undo the progress that the Fed has made under Yellen, and must all be opposed. We urge you to vote no on their nominations and do what you can to prevent their nominations from happening in the first place. Finally, we hope you will be attentive to an important issue that Chair Yellen has stressed during her tenure: for too long, the Fed’s leadership has failed to include diverse voices or sufficiently represent the public. Members of the Board of Governors and regional Reserve Bank presidents have disproportionately been white men from corporate and financial backgrounds. Chair Yellen has begun to change that. Earlier this year, for instance, the Board of Governors approved the selection of the first African American regional Reserve Bank president in the Fed’s history. According to reporting, every single candidate under consideration to fill new vacancies at the Board of Governors is a white male and most have deep connections to Wall Street. Before voting to approve nominees, please ask candidates if they will uphold the full employment mandate, if they will prioritize the needs of workers, if they will pursue policy that creates jobs even if it is against the strictures of rules-based decision making, and if they approve of the extraordinary -- and effective -- measures the Federal Reserve took in the post-crash period to drive unemployment to its current low levels. If a candidate is not fully committed to full employment, they do not deserve your vote. Kevin Warsh, Marvin Goodfriend, John Taylor, and others of the same ideology do not deserve your vote. Sincerely, Action NC California Reinvestment Coalition Center for American Progress Center for Popular Democracy Action Center for Responsible Lending Demand Progress/Rootstrikers Economic Policy Institute Policy Center Greenlining Institute International Federation of Professional and Technical Engineers Make the Road New York Missourians Organizing for Reform and Empowerment New York Communities for Change NAACP Neighborhoods Organizing for Change Progressive Congress Action Fund Public Citizen National Alliance of Community Economic Development Associations National Coalition for Asian Pacific American Community Development

National Association for Latino Community Asset Builders National Urban League Neighborhood Housing Services of South Florida Safe Places for the Advancement of Community and Equity

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