Political Animal


August 12, 2011 4:35 PM Filling Fed vacancies

By Steve Benen

Given the larger circumstances, this is not a good time for the Federal Reserve to have vacancies, especially when there’s a Democratic White House in a position to fill them. It’s hard to say what, if anything, Chairman Ben Bernanke intends to do next to prevent the economy from slipping backwards, but the more constructive voices on the board, the better.

True to form, some far-right Republicans have deliberately stalled the process of filling the vacancies, including refusing to allow the Senate to consider Peter Diamond’s nomination because he’s only the recipient a Nobel Prize in economics and an expert in unemployment.

GOP intransigence is obviously to blame for the mess, but assigning responsibility doesn’t resolve the larger problem. So, the White House is trying once again, this time with a bipartisan pair of nominees.

The Obama administration has identified two economists, one Democrat and one Republican, for two empty seats on the seven-member Federal Reserve Board, according to several people familiar with administration deliberations.

The two are Jeremy Stein, a Harvard University specialist in finance, and Richard Clarida, an executive vice president at money manager Pimco and professor of economics and international affairs at Columbia University.

Mr. Stein did a stint in the White House at the beginning of Barack Obama’s presidency. Mr. Clarida was a Treasury official in the early years of the George W. Bush administration.

I’m not terribly familiar with either of these economists, but Matt Yglesias, who’s pushed as aggressively as anyone to bring the Fed to full strength, seems mildly encouraged.

Barack Obama’s come up with some Federal Reserve Board nominees. One Democrat, Harvard Jeremy Stein, and one Republican, Columbia’s Richard Clarida. My hope is that this is some kind of package deal that’s been worked out with Senator Shelby and these two will be confirmed reasonably expeditiously. The last time I saw Clarida doing popular writing on the macroeconomic situation it seemed reasonably sensible (certainly no kind of Tea Party mania) though I disagree with the view of the recession that puts so much emphasis on the health of the credit channel. That’s very much Ben Bernanke’s view of things, though, and doesn’t seem to be an issue that’s been contested actively on the FOMC. Stein is a very interesting choice since he’s actively engaged in research on the interest on excess reserves (PDF) issue and other relevant topics. I think both of these guys should provide some ballast against hawkish regional fed presidents, but I’m still trying to learn more.

President Obama will, by the way, have another chance to nominate another Fed official early next year, when a Bush appointee’s term expires. One can only assume he or she will draw immediate GOP opposition, or more likely, Sen. Richard Shelby (R-Ala.) will simply hold him or her hostage, asking the White House, “What’s a Fed nominee worth to you?”

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.


Post a comment
  • Richard on August 12, 2011 4:43 PM:

    President Bartlett did the same thing with two Supreme Court nominees, one liberal and one conservative. Maybe WH staff are watching The West Wing.

  • Michael on August 12, 2011 5:10 PM:

    This childish hostage taking is so sick in our government,but it is all we can look forward to because IQ's have fallen to such a low level given the way media has been taken over by conservatives, who STILL crow about liberal bias in the media,a very stupid brainwashed electorate, May they get washed out next election, because of their idiotic actions.

  • exlibra on August 12, 2011 5:59 PM:

    Shelby might, just possibly *might*, be gracious enough to give Clarida a pass, in exchange for Obama dropping Stein. But, if he does, I'd expect Senators DeMented and Paul to pitch a hissy. Professors? Elitists, who drink Earl Grey, instead of honest-to-goodness, Best Value, generic tea! String 'em both up, but high!

    "ionviews manage", says Craptcha, succinctly. Expanded: And yon ion-sized duet will manage to impose its views on the rest of the Repub contingent, leaving both nominees twisting in the wind, as per usual.

  • Basilisc on August 12, 2011 6:55 PM:

    Both are well respected economists. Clarida is a macroeconomic modelling guy, close to the mainstream, not a nut. Stein is more interesting - really a pathbreaking financial markets/corporate finance economist, who has a wide range of interests. He was part of the "Squam Lake" group that put out a report on financial regulation last year that contained a number of provocative ideas, supported by sound reasoning. Two excellent choices.

  • Napoleon on August 12, 2011 8:03 PM:

    Is there any reason he has to nominate a Republican? If not this just points out what a complete joke he is.

  • rational on August 13, 2011 3:56 AM:

    The Fed doesn't care about unemployment. They only care about keeping their member banks profitable. We should have extracted many concessions from the Fed when it came begging for a bailout in Fall '08. We didn't, and gave them the store without any conditions.

    The Fed hasn't been of much use the last 15+ years. They only care about inflating bubbles for the benefit of their member banks. Period.

  • ARepublican? on January 06, 2012 11:12 PM:

    Ron Paul, anyone?