Fed Governor Donates to Clinton as Bank Guards Independence


Lael Brainard, governor of the U.S. Federal Reserve, reacts as she speaks with other attendees during a banking supervision forum at the ECB headquarters in Frankfurt, Germany, on Nov. 4, 2015.

Photographer: Martin Leissl/Bloomberg
  • $750 in donations from November to January was within rules
  • Issue of Fed governor giving to a candidate is `one of optics'

At a time when Federal Reserve officials are making the case that monetary policy needs to be non-partisan and independent, a sitting governor has given money to Hillary Clinton.

QuickTake Campaign Finance

Fed Governor Lael Brainard gave $750 in three contributions to Clinton’s campaign between November and January, according to Federal Election Commission records.

Brainard, an Obama administration appointee to a top Treasury post before she joined the Fed, acted within federal rules and has strong family ties to Clinton. Her husband, Kurt Campbell, was formerly a top adviser to the former secretary of state, serving as assistant secretary for east Asian and Pacific affairs.

While Fed officials sometimes identify with either major political party, donations to a presidential candidate by a senior policy maker are unusual, particularly at a time when the central bank is trying to guard its independence from politics. The Fed’s authority has been criticized during the campaign, and both Democratic and Republican lawmakers have questioned decisions about regulation and monetary policy.

Republican Narrative

Brainard’s donations “could provide fuel for Republican narratives about the proximity of the Fed and the board to the Obama administration,” said Sarah Binder, a senior fellow at the Brookings Institution who is writing a book about politics and the central bank.

Senator Richard Shelby, the Alabama Republican who heads the Senate Banking Committee, said Brainard’s contributions “validate” his concerns about allowing a single president to nominate every Fed board member.

“Governor Brainard’s contributions to Hillary Clinton’s campaign call into question the political independence of the board,” he said in an emailed statement from his press office.

No other Fed governor has donated to a presidential candidate in this election cycle, according to a search of federal records. Michelle Smith, a Fed spokeswoman, said board members do not engage in partisan political activities, but, like all executive branch employees, may vote and may make campaign contributions under federal guidelines.

Issue of Optics

“If there is an issue here, it is one of optics,” Binder said. “It is a question of where governors want to draw their own lines and how they want to be perceived.”

House Republicans are trying to get the Fed to abide by policy rules. Last year, they passed the Federal Reserve Oversight Reform and Modernization Act. The bill, which Fed Chair Janet Yellen opposed and hasn’t proceeded into law, would require the Fed to describe their policy rule to Congress, and it would be subject to review by the Government Accountability Office.

Brainard, 54, brings international experience to her Fed policy making at a time when the outlook for growth abroad is murky. As Treasury undersecretary for international affairs from 2010 to 2013, she was a senior U.S. representative to the Group of 20 and G-7 deputies. She received the Alexander Hamilton Award for her service at the Treasury. She joined the Fed in June 2014 and has a term that runs until 2026.

Urged Caution

Lately, as global markets reeled over uncertainties about growth in Asia and emerging markets, her insights into how those events could affect U.S. growth have raised her profile in monetary-policy debates. She’s recently argued for caution on the timing of interest-rate increases in the face of headwinds from abroad.

“Sources of robust demand around the globe are few, and sources of weakness relatively greater, as evidenced by persistently below-target inflation in all of the major advanced economies,” she told a group of international bankers on Monday.

Political donations by a sitting Fed governor are not without precedent. Alice Rivlin, who was appointed to the Fed board by former President Bill Clinton and served as vice chairman from 1996 to 1999, donated $500 in 1998 to the Democratic National Committee, FEC records show.

Current governors at the Fed have given money as private citizens to political causes. Jerome Powell, for example, has given to Republican causes when he worked for Carlyle Group LP, the private equity firm. Yellen, Vice Chairman Stanley Fischer and Governor Daniel Tarullo also made political contributions before they worked at the Fed, records show.

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