Replacing Janet Yellen as chairman of the Federal Reserve Board, Jerome H. “Jay” Powell was sworn in Monday at the helm of the nation’s central bank and banking regulator.
Seven hours later, the Dow Jones Industrial Average (DJIA), a popular yardstick for measuring the growth or decline of the stock market, declined by 1,175 points to 24,344 — a 4.6% drop.
While it was not the largest percentage decline in the DJIA, it was reportedly the biggest decline in points ever recorded in one day. The Monday drop in values followed a decline the previous trading day — Friday — when the DJIA declined by 666 points.
Two other market indicators also fell: the Nasdaq finished down almost 4%, and the S&P 500 declined more than 4%.
According to some reports, the equity markets looked at the new chairman (who replaced Yellen as chair of the Fed Board) as a sign that the central bank will accelerate interest rate increases and slow the economy.
Yellen, whose term as board chair was scheduled to end this month after serving since 2014 — and who had been serving a term as a board member that was set to expire in January 2024 — resigned from the Fed Board over the weekend. One of her last actions as board chair was to sign off Friday on what has been described as “unprecedented” actions against Wells Fargo bank. The Fed actions limit the bank’s growth and orders replacement of four of the bank’s board directors.
According to the Fed, the sanctions were imposed following “widespread consumer abuses and compliance breakdowns” at the company.
Powell, 65 this month, has been a member of the Fed board since 2012. Aside from his service at the central bank, he also served in the Treasury Department during the administration of President George H.W. Bush in the early 1990s, as assistant secretary for financial institutions, and as undersecretary of domestic finance – both positions that interface with federal financial institution regulatory agencies.
In a video posted to the Fed’s website which accompanied the announcement of Powell’s taking the oath of office, the new chairman said he was “humbled and honored by this opportunity to serve the American people. And as I begin my term, I want to stress my commitment to explaining what we’re doing and why we are doing it.”
He indicated that partisanship will have no place in the board’s deliberations under his leadership.
“My colleagues and I will remain vigilant, and we are prepared to respond to evolving risks. We will also work hard to make sure that our regulation and supervision are efficient as well as effective,” Powell said. “At the Federal Reserve, we know that our decisions matter for American households and businesses. Our long-standing, non-partisan tradition is to make decisions objectively, based only on the best available evidence.”
President Donald Trump nominated Powell to the position in November; the Senate confirmed him Jan. 23.
Powell’s term as chairman is four years; his term as a member of the board ends Jan. 31, 2028. The oath was administered by Fed Vice Chairman for Supervision Randal Quarles.