Tags: Senate | Fed | Nominee | reserve

Senate Panel Votes to Approve 2 Fed Nominees

Thursday, 29 Mar 2012 01:56 PM

 

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The U.S. Senate Banking Committee voted to approve two nominees to the Federal Reserve Board on Thursday, although there was opposition from two Republican senators.

The nominations of Jeremy Stein and Jerome Powell now go to the full Senate, although the timing of the vote is not clear.

Stein is a Harvard economist who served a stint as a National Economic Council member and was a senior adviser to Treasury Secretary Timothy Geithner. He holds a doctorate in economics from the Massachusetts Institute of Technology and is an expert on financial market behavior.

Powell is a lawyer who brings some Wall Street experience with him as result of having worked at Bankers Trust, the Carlyle Group and Dillon Read after serving as a Treasury undersecretary in the administration of former President George H. W. Bush.

Democrats may try to get the nominees confirmed by the full Senate this week before leaving for a recess.

Ranking Republican Senator Richard Shelby of Alabama said two fellow Republicans, Senators Jim DeMint of South Carolina and David Vitter of Louisiana, were opposed to the Fed nominees.

On Wednesday, Vitter said in a statement that he would move to prevent a quick confirmation for the two Fed nominees, whom he described as "rubber stamps who approve of the Fed's activist policies."

If confirmed by the Senate, the nominees would bring the U.S. central bank's board to its full seven-member strength for the first time since April 2006, although another vacancy could arise soon.

The term of Elizabeth Duke, the last remaining Fed appointee under former President George W. Bush, expired at the end of January. Governors can stay in office until replaced but she has not committed to do so.

Fed board terms run for 14 years but Stein and Powell have been nominated to fill out unexpired terms. Powell's term would end on Jan. 31, 2014, and Stein's would end on Jan. 31, 2018.

Having a full board would likely provide Fed Chairman Ben Bernanke a stronger counterweight to the 12 regional Fed bank presidents, some of whom have dissented against recent policy discussions because they thought the Fed should ease up on its aggressive efforts to stimulate growth.

The Fed said in January that economic conditions warrant keeping interest rates "exceptionally low" through at least 2014, about 18 months longer than it had previously projected. That makes some analysts uneasy, however, for fear that such a lengthy period low rates might foster price inflation if growth suddenly picks up.

Powell said at a hearing last week that the timing of a departure from ultra-loose monetary policy was the greatest challenge the Fed faces. Stein also said that if growth picks up, it would be appropriate to reconsider the low-rate policy.

© 2014 Thomson/Reuters. All rights reserved.

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