White House Nominates Three in Potential Reshape of Fed
01/10/2014 10:57 AM
01/10/2014 10:57 AM
President Barack Obama may not get the chance to remake the composition of the Supreme Court but he'll get to do that at the Federal Reserve if his three eclectic nominees announced Friday are approved by Congress.
Fresh on the heels of Monday's confirmation of Janet Yellen as the first woman ever to head the world's most influential central bank, Obama offered three more candidates to join the Fed's Board of Governors.
In an unusual move that had been rumored for weeks, Obama nominated Stanley Fischer to join the Fed and be its vice chairman. What makes the pick different is that Fischer served as governor of the Bank of Israel from 2005 until last year, navigating that central bank during a time of global turmoil.
Before that Fischer was vice chairman of Citigroup from 2002 to 2005, a time when many of the exotic financial instruments flourished that eventually caused the near collapse of the global financial system.
The tenure at Citi might turn off some Democrats who decry the revolving door between the Treasury Department, Fed and Wall Street. It also weakens the argument by Democrats that Wall Street is too cushy with the GOP.
Fischer was also a top official at the International Monetary Fund during much of the 1990's, a period in which trade agreements and economic liberalization proliferated around the globe.
Obama also nominated Jerome Powell to continue serving as a Fed governor, a post he now holds. Powell was a partner in the private-equity firm The Carlyle Group from 1997 to 2005, and before that served as undersecretary of the Treasury Department during the presidency of George H.W. Bush.
The only nominee without Wall Street ties was Lael Brainard, who served as Obama's Treasury undersecretary for international affairs from 2010 to 2013 and was involved in efforts to harmonize financial regulation across the globe. Prior to that she was a prominent economic researcher at the Brookings Institution and served as an adviser during the Clinton administration.
Fed governors serve a 14-year term that is not subject to reappointment. Terms begin every two years. But members such as Powell appointed to an unexpired term can be reappointed.
The chairman and vice chairman of the Fed are four-year terms, subject to Senate confirmation, that can be reappointed as long as they do not surpass the underlying 14-year term as a governor. Many chairmen and vice chairmen step down rather than returning to serve out their longer term as a governor.
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