News that President-elect Joe Biden intends to nominate former Federal Reserve Chair Janet Yellen — the first fed chair to acknowledge the problems caused by inequality — to serve as treasury secretary broke yesterday. During her time as chair of the Federal Reserve, Yellen was receptive to progressives who pushed the Fed to be more responsive to communities of color. Upon hearing the news of her nomination, Sen. Elizabeth Warren called Yellen “smart, tough, and principled.”
Nevertheless, as fed chair, Yellen could have done more to advance financial regulation. She rarely spoke out on the topic until a 2017 warning against regulatory rollbacks — a warning that some speculated was the reason Trump did not renominate her. However, The Washington Post reported a simpler, more insulting reason: Trump decided not to renominate Yellen as fed chair because he thought she was too short.
As treasury secretary, Yellen will now have her work cut out for her, as both she and Biden are inheriting a messy situation made messier by Trump’s active attempts at sabotage.
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The Trump administration continues to stymie President-elect Biden’s transition. It took more than two weeks before General Services Administration (GSA) head Emily Murphy finally acknowledged on November 23 that Joe Biden is the winner of the election. As a result, federal funds meant to go to the transition had been held up, and Biden and Harris will only now begin to receive briefings on the status of vaccine distribution plans and other pandemic response matters.
In a statement in response to the GSA news, the Biden transition team said it would begin meetings quickly to discuss the pandemic and national security, and to “gain complete understanding of the Trump administration’s efforts to hollow out government agencies.”
The long delay to the start of the formal transition is hardly the only way that the Trump administration is working furiously to sabotage the incoming administration. Trump officials are also making moves to make future diplomacy, economic recovery and climate change remediation more difficult.
Secretary of State Mike Pompeo, who has not acknowledged Joe Biden’s victory, spent the last week and a half creating diplomatic outrage across the world. In Paris, Pompeo met with reporters from the right-wing French magazine Valeurs Actuelles, which was criticized for its racism after it printed an image depicting a Black French lawmaker as a slave. Then, Pompeo became the most senior U.S. official to visit an Israeli settlement in the occupied West Bank. He traveled to a winery built on land claimed by Palestinians; the Israeli-owned winery had previously named a wine after Pompeo. Most in the international community, including the United Nations, consider these settlements illegal under the Geneva Convention. But Pompeo announced that the U.S. will allow goods produced in Israeli settlements in occupied Palestinian territory to use a “Made in Israel” label. Pompeo also visited the Israeli-occupied Golan Heights in Syria. Syria condemned the visit, calling it “provocative” and a “flagrant violation” of Syrian sovereignty.
Stephen Miles, executive director of Win Without War, described Pompeo’s 10-day tour as a way to actively sabotage Joe Biden. Shadi Hamid, a senior fellow at the Brookings Institution, told Bloomberg that Pompeo was spending the remainder of his time in office “trolling the world.”
It’s not just diplomatic problems the outgoing Trump administration is causing; it appears to be attempting to create economic ones as well. Last week, Treasury Secretary Steven Mnuchin said he would shut down most of the Federal Reserve’s emergency lending programs — including the program meant to lend to municipalities — and return any unused money. Since the Fed has only used about $25 billion, that totals some $429 billion. This means the likely end to future loans the Fed could have made to municipalities and medium-sized businesses in order to help aid the economic recovery. It’s worth noting, though, that the CARES Act only demands that any unused funds be sent back to the Treasury’s general fund — to be used for deficit reduction — in 2026. This means Yellen could, in coordination with the Fed, potentially restart the programs in the next administration.
House Financial Services Committee Chair Maxine Waters said the Trump administration was trying to “spitefully destroy the economy” with the move.
It need not be this way — the Fed could refuse the Treasury’s request. But thus far, it hasn’t, instead releasing a letter that stated it would “work out arrangements” to return the unused funds. The Biden transition team called the move “deeply irresponsible.” Congressional Oversight Commission member Bharat Ramamurti called the Fed’s decision “disappointing,” and contrasted the way the Fed got “creative” during the 2008 crisis and “stretched every authority to help big banks” to “doing the bare minimum” in 2020 when Congress asked it to help small businesses, states and cities.
Indeed, that the Fed went along with the Treasury implies that Federal Reserve Chair Jerome H. Powell may not disagree with the move. Powell has not been eager to heed the many calls for reform to the emergency lending programs, which are intended to be used to boost markets for corporate bonds, state, city and municipal bonds, and provide loans to medium-sized businesses. For example, House Financial Services Committee Chair Maxine Waters and Delegate Michael San Nicolas of Guam repeatedly called on the Fed to loan to U.S. territories through the program. The Fed never made it happen. Given that the Biden administration would likely ask the Fed to ensure more states and cities could participate in the program, it may have been politically convenient for the Fed to let the Treasury shut it down instead.
This is hardly the first attempt by the Trump administration at hindering economic recovery in the new year. The Trump administration has thus far refused to extend either the federal student loan suspension or the evictions moratorium, meaning that, pending further action, federal student loan borrowers will need to restart payments on January 1, and renters will be vulnerable to evictions.
Not content to stop at attempts to hamper diplomacy or the economy, the Trump administration is also trying to give oil and gas firms everything it can on the way out. Trump has gutted environmental regulations throughout his entire term and he isn’t slowing down in these last few weeks. On November 17, the administration moved another step closer to allowing oil and gas companies to drill in Alaska’s Arctic National Wildlife Refuge, home to the Gwich’in people and the migration path of North America’s largest caribou herd, which Biden has plans to permanently protect. And this past week, the banking regulator at the Office for Comptroller of the Currency announced a proposed rule that attempts to force banks to loan to oil companies, or any other companies a bank may have deemed poses a reputation risk. The way the Office for Comptroller of the Currency proposed the rule was particularly offensive, comparing a refusal by banks to loan to weapons manufacturers to discrimination.
Georgetown law professor Adam Levitin questioned whether the Office for Comptroller of the Currency even has the authority to enact this proposal. And climate groups criticized the move as an attempt to intimidate banks into investing in financially risky projects. Gregg Gelzinis from the Center for American Progress called it an “abuse of power.” And Ben Cushing from the Sierra Club said that “no amount of saber-rattling” by the outgoing Trump administration will change the inherent riskiness of Arctic drilling projects that “any savvy financial institution would stay far away from.”
From a controversial international tour by the secretary of state, to shutting down emergency lending programs at the Fed as the pandemic accelerates, to continuing to do damage to the climate, Trump, with the consent of the GOP, is trying to sabotage Biden’s chances at a recovery every way he can. But it’s the nation itself that will suffer — and Trump and his administration don’t care. As Adam Serwer wrote in 2018 of Trump’s policies, “the cruelty is the point.” Trump is doing his best to accelerate it in his final weeks in office.