Lisa Cook, an economist, is set to make history at the Fed, but she must first endure a questioning from senators.

• Lisa Cook, the Federal Reserve nominee, has a career focused on research that highlights the advantages of equality and initiatives to enhance economic development by minimizing disparities based on race and gender.
• On Thursday, the Senate Banking Committee will hear from Cook, Raskin, and Jefferson, who are all nominees for key positions.
• If confirmed by the Senate, Janet Cook would become the first Black woman to hold a seat on the Federal Reserve Board in its 108-year history.

On Thursday, the Federal Reserve Board of Governors' nomination hearing for President Joe Biden's latest appointees will be closely watched by Wall Street and Washington.

Lisa Cook, an economist with a career focused on researching equitability and inequality, will testify at the Fed with proposals on how federal policy can enhance economic growth by providing better opportunities for women and racial minorities.

Cook's nomination to the Fed board is likely to make her a favorite among Democrats, including Sen. Sherrod Brown of Ohio, due to her unique resume. This could also mark a historic moment for the central bank, as Cook would be the first Black woman to serve on its board in its 108-year history.

Although her nomination is historic, the confirmation process in a 50-50 Senate split by party may not be smooth.

The GOP accused Cook of blocking them on Twitter before the hearing, and the Republicans on the Banking Committee criticized Cook's social media posts for being too liberal.

Biden appointed Cook, an economics professor at Michigan State University, to the Fed's board of governors at a crucial moment. If confirmed by the Senate, Cook would contribute her extensive research on race-based disparities and global economics to the Fed's efforts to curb inflation rates, which are currently around 7%.

Last year, Cook shared her views on inflation with Detroit-based WDET, stating that the current price increase is unlike previous ones.

She stated on the radio station in November that she observed inflation, as her grocery bill was increasing like everyone else.

"Supply disruptions" is a more fitting term for the current economic situation, as the pandemic continues to impact the economy, according to her. If the pandemic did not exist, the Fed would still be focused on achieving a 2% inflation target, and we would not be discussing this issue.

On Thursday, the Georgia native will appear before the Senate Banking Committee alongside fellow nominees Sarah Bloom Raskin, a former board member, and Philip Jefferson, an economist with central banking experience.

Cook has spent years studying the disparities in the market for intellectual property and innovation, with a particular focus on why the U.S. government grants so few patents to women and Black Americans.

Gender and racial disparities exist in every stage of the innovation process, including education and training, invention, and commercialization, and can negatively impact productivity and the economy, as she stated in 2020.

Cook studied global economics, including her firsthand experience with inflation in Nigeria and research on Soviet innovation while completing her dissertation.

She obtained a Ph.D. in economics from the University of California, Berkeley after earning a bachelor’s degree from Spelman College in Atlanta.

Tension before hearing

The hearing may face controversy less than a day before it takes place.

On Wednesday morning, the official Senate Banking GOP account announced that Cook had restricted its access to her profile and tweets. The Republican account had previously utilized some of Cook's prior social media posts to assert that she was too partisan to join the Fed.

Prof. Cook has been involved in political fights on Twitter for years, advocating for extreme left-wing views, particularly on noneconomic topics. This raises the question: Will @drlisadcook respect the independence of the @federalreserve?

Sen. Pat Toomey, a Republican from Pennsylvania and the committee’s ranking member, expressed his concern about Raskin’s fellow nominee, citing her recent comments on climate change and her perceived reluctance to limit funding for fossil fuel companies.

This year, Toomey, who is not running for reelection, has been a vocal critic of nominees who seek to expand the Fed's powers beyond its mandate of maximum employment and inflation control, which he calls "mission creep."

Although some have criticized Cook's advocacy, her supporters believe her addition to the Fed would be beneficial at an institution that has been criticized for its lack of diversity. Cook previously worked as a senior economist at the White House Council of Economic Advisers under the Obama administration and spent a year as a Treasury Department official during the Clinton and George W. Bush years.

"The three nominees have demonstrated their understanding of our economy and the individuals who drive it, as evidenced by their successful and esteemed careers," Brown stated in a recent news release.

He urged his colleagues to support the nominees and look forward to their hearings before the Banking and Housing Committee, as they would bring important perspectives to the Federal Reserve Board about the economic issues faced by women, Black and brown workers, and rural and industrial communities across the country.

Targeting disparities

As a career studying inequalities, Cook is likely to be a critical voice at the Fed in discussions about raising interest rates in an economy where Black Americans are still lagging behind in the national employment recovery.

Despite a decrease in the U.S. unemployment rate from 4.2% to 3.9% in December, the jobless rate for Black women increased by 4.9% to 6.2%, compared to 3.1% for white women. Additionally, the unemployment rate for Black men decreased slightly to 7% from 7.2%, but remained higher than the 3% rate for white men.

The Fed has been tasked by Congress with maximizing employment and maintaining price stability. However, with inflation at multidecade highs, many economists and politicians are urging the Fed to begin raising interest rates, which are intended to limit borrowing and curb spending throughout the economy.

Some argue that the Fed should take a more cautious approach and consider a broader definition of maximum employment to address race-based disparities, which is not widely supported on Wall Street and Capitol Hill.

Reducing disparities in race-based economic indicators could result in a larger overall GDP growth, according to Cook and others.

If policymakers do not address economic disparities, what are the consequences for the United States and the world economy?