President Biden will boost funding for U.S. economy says Evercore ISI's Krishna Guha
This week, U.S. President-elect Joe Biden is expected to nominate Janet Yellen as the next U.S. Secretary of the Treasury. “Yellen is supremely qualified. She believes it is essential to continue fiscal as well as monetary support for the economy” wrote Krishna Guha at Evercore ISI, a Wall Street firm.
In 2019, Guha was ranked in the top team of policy analysts by Institutional Investor. This annual ranking of Wall Street analysts by the magazine, is based on a survey of 4,000 analysts and managers at over 1,400 institutions managing an estimated $10 trillion.
Yellen, 74, has been a senior policy official during times of major financial and economic crises, notes Guha. From 2010-2014, as vice-chair of the U.S. Federal Reserve Board, she helped develop policies to tackle the economic and financial fallout from the 2008-2009 financial crisis. The crisis was triggered by the collapse of a housing bubble in the U.S. From 2014-18, she was chair of the Fed, nominated to the position by President Barack Obama. Earlier, from 2004 to 2010, she was a member of the Fed’s Board of Governors and, from 1997 to 1999; she chaired President Bill Clinton’s team of economic advisers.
If confirmed by Congress, Yellen will immediately have to tackle a major funding issue. On November 19, current U.S. Treasury Secretary Steve Mnuchin asked the Fed to return $455 billion of funds, the treasury gave the Fed, by this year-end. The funds were to be used by the Fed in lending programs for mid-size businesses, municipal bond issuers and other borrowers.
“Mnuchin’s move will tighten financial conditions and removes a safety net for markets at the wrong moment,” wrote Guha. Mnuchin’s action was opposed by Jerome Powell, chair of the Fed. “The funding performs a backstop role for when markets find themselves in a more challenged situation,” Fed Board member Charles Evans told CNBC. “I think that backstop role might be important for quite some time, so it’s disappointing.”
The surprise termination of the Federal Reserve’s emergency liquidity programs “prematurely and unnecessarily ties the hands of the incoming (Biden) administration, and closes the door on important liquidity options for businesses at a time when they need them most,” the U.S. Chamber of Commerce stated. The chamber is the main political and policy lobby of major American businesses.
The Fed, at its next meeting on December 15-16, will try to take measures to counter Mnuchin’s withdrawal of funds, says Guha. The Fed will likely assure financial markets that it is ready to pump more funds into the economy by strengthening its quantitative easing program, he says.
Guha is Vice Chairman of Evercore ISI, heading its Global Policy and Central Bank Strategy team, which is based in Washington, D.C. Evercore is an investment bank based in New York, with more than 90 partners and 1,600 employees. It has handled over $3 trillion of merger, acquisition, recapitalization and restructuring transactions for Du Pont, Levi’s and other corporate clients. Evercore, which is listed on the New York Stock Exchange, has a market value of $3.8 billion. The firm was founded in 1995 by Roger Altman, who was a deputy secretary of the Treasury under President Bill Clinton.
From 2010 to 2013, Guha was an Executive Vice President and member of the Management Committee at the New York Federal Bank. He led the bank’s external relations and communications and was a senior advisor on monetary policy strategy and policy communication. He also co-chaired the bank’s housing policy working group and managed a department of about 60 officials.
Earlier, Guha was a senior writer on global economics and economic policy at the Financial Times, where he held a series of senior positions including US Economics Editor. He was a fellow at Japan’s Keizai Koho Center and Nihon Shinbun Kyokai. He has lived and worked in the US, Europe and Asia. In 1993, he took part in a joint Anglo-Chinese expedition to cross the Taklamakan Desert in Xinjiang Province, China.
Guha earned a degree in history at Sidney Sussex College, Cambridge University, and a masters in geo-economics at the Kennedy School of Government at Harvard, where he was a Fulbright Scholar.
