On a crisp and clear autumn day a week ago, US president Joe Biden pardoned two turkeys ahead of the Thanksgiving holiday, and called Jay Powell to offer him a second chance as chair of the central bank.
“At this moment of both enormous potential and enormous uncertainty for our economy, we need stability and independence at the Federal Reserve,” Biden said this week.
Biden’s nomination of Powell for a new four-year term at the helm of the Fed was far from an act of presidential mercy — even though it took him weeks to settle on the decision.
By choosing the 68-year-old Republican rather than a fellow Democrat for the post, at a time of fierce political polarisation in the US, Biden was recognising Powell’s stewardship of the central bank during the pandemic and betting on his abilities to tame inflation without undermining the economic recovery. But Biden was also rewarding Powell’s undogmatic and unpretentious style, which has earned the respect and admiration of many White House officials, Fed staff and members of both parties on Capitol Hill.
“He’s not going to brag about how great he is. He’s not going to lord it over anybody,” David Rubenstein, co-founder of Carlyle, the private equity group where Powell worked from 1997 to 2005, told the Financial Times. “He’s an even-keeled, likeable, personable guy. He doesn’t have a PhD in economics, but he does have a PhD in how to get along with people.”
Powell is a Washingtonian through and through. He was born in the US capital in 1953 to a wealthy, well-educated Catholic family, as one of six children. It was a high-achieving household. His mother was a mathematician and statistician, his father a lawyer representing steel companies in union talks. His parents were both top of their classes at Blessed Sacrament, the same Catholic school Powell attended in north-west Washington. Powell’s grandmother once pulled out an old Sunday mass bulletin that reported their academic success and stuck it under the future Fed chair’s nose to show what was expected.
The family always lived within walking distance of Chevy Chase Circle, a large roundabout on the border of the District of Columbia and Maryland. He still lives in the area today. One of Powell’s passions is playing the guitar; he also likes golf. He has been an avid cyclist in the past — less so now. Powell reads at night: a current favourite is The Saxon Stories, a series of historical novels by Bernard Cornwell about medieval England.
Powell was not a stellar student early on — in fact, he was a little disorganised. Still, he made it to Princeton University, where he studied African politics, and Georgetown Law School. He then moved to Wall Street to work for investment bank Dillon Read under Nicholas Brady, later Treasury secretary to Ronald Reagan and George HW Bush. In New York Powell met Elissa Leonard, a film-maker. The pair married in 1985 and have three children.
Brady had vowed not to hire anyone from the bank to serve in government, but made an exception for Powell, who joined the Treasury in 1990 and became under-secretary for domestic finance in 1992. After Bill Clinton swept into office, Powell went to Carlyle, where he did deals in the industrial and consumer sectors for the US buyout group.
Public service was his greater calling. He joined the Bipartisan Policy Center, a think-tank, where from a small cubicle he helped try to defuse the debt ceiling crisis of 2011, pitting Barack Obama against Republican lawmakers. Obama tapped Powell for a Fed governor post that began in 2012, and once Donald Trump became president, he got the top job.
In his first term Powell was credited with a willingness to shake up the Fed’s thinking after learning tough lessons from the slow recovery of the 2008 financial crisis. “I think of Powell as someone who is genuinely curious, genuinely open-minded, always learning, never satisfied with assumptions,” a White House official said.
He also added unusual empathy to the Fed’s communications. Powell reflected on Americans suffering through the Covid-19 crisis and on the nation’s reckoning with racial injustice.
Powell is not a practising Catholic, but has backed the Church’s charitable work in the capital. “He is a man with a big heart for those in need,” said Monsignor John Enzler, president and CEO of Catholic Charities of the Archdiocese of Washington, who has known Powell’s family for 30 years. “I would never decry someone else’s faith journey, but I think his journey is celebrated in service to other people.”
Subjected to furious attacks from Trump, Powell did not openly rebuff the ex-president, but made clear he would not resign if asked. “It takes a very strong-willed person to be able to resist getting beat up by the president of the United States. He did what he thought was right, and in the end deserves credit for not getting into pitched battles with the White House,” Rubenstein said.
Powell’s critics on the left say he was too lenient on financial regulation and hesitant on climate. Others say the Fed has fallen behind the curve on inflation. But supporters trust Powell to tackle higher prices via monetary policy if needed and to convince markets, politicians and the public that he has it under control. “He is someone who when he sees a problem he does something about it, said Shai Akabas, who worked alongside Powell at the Bipartisan Policy Center. “It stays at the top of his mind until it gets addressed.”