We've puzzled over the White House's radio silence on the matter of Federal Reserve appointees before, and now that Vice Chair Donald Kohn has announced his plan to retire, speculation has renewed about what Obama will do -- remember, the Fed needs five members of the board of governors to take action unless there is an emergency, and with this news, there would only be four members come June. Yesterday, Press Secretary Robert Gibbs had this to say:
The President will seek to have nominees -- that he'll seek to nominate somebody quickly and hopes that they can be quickly confirmed. Obviously we spent some time and energy earlier in the year working for Chairman Bernanke's confirmation, as the continuity and stability in the financial system the President and the economic team believe to be very important. And I think the same can be said for the Board of Governors.
However, this BusinessWeek story on the mechanics of the appointment should offer some hope to those who want the Fed to take more action on unemployment:
Possible Kohn successors, according to Fed watchers and former officials, include Fed Governor Daniel Tarullo, 57, who’s backed tougher bank regulation; Christina Romer, 51, an architect of the administration’s 2009 fiscal stimulus; and San Francisco Fed President Janet Yellen, 63, one of the central bank’s top advocates of lower interest rates.
All three would be solid picks, and since there are three slots available, why not nominate them all? (If Obama makes Tarullo vice chair, he would have to nominate a fourth person to fill the former law professor's seat since he's already on the board). The administration has been very opaque about its approach to Fed nominations, so only time will tell, but appointing a left-leaning majority to the Fed's Board of Governor's is a major opportunity to shape economic policy for decades to come.
-- Tim Fernholz
