As speculation mounts regarding the next chair of the Federal Reserve, two prominent figures have emerged as frontrunners: Kevin Hassett and Rick Rieder. Neither candidate is light on experience when it comes to economics and finance. Their very different backgrounds and affiliations raise critical questions about how each of them would choose to lead at the Fed.
Kevin Hassett, a long-time beltway conservative economist, who has been a key adviser to the former President Donald Trump. He served as chair of the White House Council of Economic Advisers during Trump’s first term and currently leads the National Economic Council. Fears critics and some analysts doubt his ability to maintain the Fed’s historical independence if confirmed. This doubt is due in part to Graham’s deep connections to Trump. In a CNBC interview over the weekend, Hassett doubled down on the Fed’s independence. He called it “really, really important” that the central bank be allowed to function without interference.
Hassett has relentlessly defended Trump’s economic policies. He regularly downplays new economic data that shows signs of growing vulnerabilities in the U.S. economy. He has reiterated allegations of bias at the Bureau of Labor Statistics, raising eyebrows among economists and market participants alike. Despite his strong advocacy for Trump’s policies, President Trump praised Hassett in a television interview, declaring him “such a good representative” that he would prefer to keep him in his current role.
If we take betting markets seriously, recent moves suggest that Hassett’s odds to be the next Fed chair are fading fast. At 63 years old, he is growing old in the tooth for the ever competitive and coveted position.
Rick Rieder has emerged as a dark horse favorite as well. Additionally, he’s the Chief Investment Officer of Global Fixed Income at BlackRock Inc. Rieder, von mischief on Wall Street, including fancy jobs at Lehman Brothers and starting a hedge fund. As such, he still commands tremendous respect in financial circles. Yet he also directly oversees $2.4 trillion in assets at BlackRock. It is a crucial role which provides him an important view as to how Federal Reserve policies affect international debt markets.
President Trump has reportedly been just as taken with Rieder, telling aides that he was “very, very impressive.” Rieder’s deep expertise in finance and investment makes him extraordinarily qualified to thread the needle of the very difficult monetary policy in today’s economic environment.
The remarkable opposing profiles of Hassett and Rieder represent policy approaches that should define the battle lines over America’s economic governance. While Hassett’s allegiance to Trump may raise concerns about his independence from political influence at the Fed, Rieder’s investment experience presents an opportunity for a more market-oriented approach to monetary policy.