Federal Reserve Chairman Jerome Powell adjusts his tie when he arrives to attend a “Semi-Annual Monetary Policy Report to Congress” hearing on Capitol Hill, Washington, on May 15, before a Senate Committee on Banking, Housing and Urban Affairs hearing July 2021 to testify.

Kevin Lamarque | Reuters

An economic recovery, rising wages and falling jobless claims were not enough to save Federal Reserve Chairman Jerome Powell from complaints in the Senate Thursday.

During a testimony before the Senate Banking Committee, Democrats grilled Powell over the central bank’s support for climate change initiatives and their withdrawal of financial protection, while Republicans questioned the Trump candidate about his commitment to controlling inflation.

“Big banks make cash – and they spend it on executive pay and dividends and buybacks rather than lending to communities or raising capital to reduce risk,” said committee chairman Senator Sherrod Brown, D -Ohio. “The Fed should fight this trend and protect our progress from the greed and ruthlessness of Wall Street – not aggravate it.”

Ranking member Senator Pat Toomey, R-Pa., Criticized what he sees as the Fed’s inaction on inflation.

“The Fed’s policy is particularly worrying as the warning siren of problematic inflation is getting louder. Inflation is here and it is more severe than most – including the Fed itself – expected, ”he said. “Since the Fed has proven incapable of predicting inflation levels, why should we trust the Fed to predict the duration of inflation?”

The barbs on either side of the aisle may seem unfamiliar to Powell, who was otherwise lauded by lawmakers for acting swiftly to flush the U.S. economy with cash when the Covid-19 pandemic forced thousands of businesses to shut down.

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The recent criticism of the Fed and its leader may have less to do with economics than with political attitudes. With members of both parties looking to get an early head start in the key 2022 midterm elections, Powell may find fewer public allies in Congress.

House Financial Services Committee ranking member Patrick McHenry, RN.C., proved a notable exception on Wednesday when he endorsed Powell’s candidacy for a second term.

“You deserve and deserve another tenure as chairman of the Federal Reserve,” he said Powell. “You have proven that you are a steady hand during this pandemic or ongoing recovery.”

Progressive Democrats may hope to give President Joe Biden the opportunity to nominate a Democrat to run the central bank.

Brown and other members of his caucus have urged Powell to force lenders to fight climate change, reduce income inequality between executives and their employees, and increase capital needs for the country’s largest banks.

Some, like Massachusetts progressive Democrat Elizabeth Warren, argue that the Fed should be run by a chairman who proactively seeks to strengthen Wall Street oversight. Those hoping for a Democratic Fed Chairmanship have said Fed Governor Lael Brainard is an excellent option for Biden.

“What I’m looking for is that the Fed’s balance sheet has been one step at a time over the past four years to weaken the regulation of Wall Street banks,” Warren told Powell on Thursday.

“There is no doubt that banks are stronger today than they were when the economy collapsed in 2008,” she added. “But that’s the wrong yardstick: the question is whether they’re strong enough to weather the next crisis and whether the Fed is tough enough to protect the American economy and American taxpayers.”

A Congressman on one of the relevant committees told CNBC that such criticism should be put in context and that the Fed often becomes a sandbag for politicians hoping to be re-elected on promises of economic reform.

Still, the employee said Powell’s handling of the coronavirus crisis had worked well and President Joe Biden was offering a compelling case to keep him for a second term.

The Fed is “an easy target when things aren’t going perfectly or the economy isn’t booming. It’s really easy to go to the Fed and ask, ‘What are you doing to fix this?’ ”Said the agent.

The staff member added that lawmakers were grateful to the Fed’s leadership throughout the pandemic and that Powell was still very popular with members of both parties on Capitol Hill.

Powell spent much of his time before the House and Senate answering questions about the central bank’s inflation outlook and its plans for its easy monetary policy.

He began his semi-annual testimony on Wednesday by saying the Fed is still a long way from adjusting its billions in monthly purchases of government bonds and mortgage-backed securities and has no plans to change interest rates at this time.

He seemed to make up for that on Thursday when he admitted to the Senate that “inflation is well above target”.

Ultimately, the pace of inflation and employment growth will determine when Powell and his colleagues change the Fed’s monetary policy. Markets tend to fluctuate as the Fed plans to tighten monetary policy, so when a possible cut or rate hike in November 2022 could play a crucial role.

“We announced that we would begin reducing our asset purchases if we believe the economy has made significant further progress since last December,” Powell said Thursday. “We are actively thinking about it now.”