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New Fed members under consideration – could signal major change in Fed policies

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Janet Yellin, President of the San Francisco Federal Reserve

Janet Yellin, President of the San Francisco Federal Reserve

If reports are correct, three new members of the Fed Reserve could be appointed soon. Bloomberg News and the NY Times report that the White House on Friday identified two economists and a lawyer as its choices to fill all three vacancies on the central bank’s board of governors, according to a senior administration official.

The three candidates under consideration are:

The economists are Janet L. Yellen, president of the Federal Reserve Bank of San Francisco, who is the top choice for vice chairman, and Peter A. Diamond, an M.I.T. economist who is an authority on Social Security, pensions and taxation. The lawyer, Sarah Bloom Raskin, is the Maryland commissioner of financial regulation.

These three people will make excellent Fed governors. According to Bloomberg News:

Yellen, 63, would replace Donald Kohn, a 40-year Fed veteran who resigned last week effective June 23. Yellen, who served as President Bill Clinton’s chief economist in the 1990s, said last month that the U.S. economy “still needs the support of extraordinarily low” interest rates. She would gain a permanent vote on monetary policy, instead of having a vote one year out of every three as a regional Fed chief. All governors have a vote on rate decisions. […]

Robert Parry, Yellen’s predecessor as president of the San Francisco Fed, said she is “probably pretty much in tune with the chairman’s thinking.” […]

“I can’t imagine there will be many candidates as qualified as she is,” Parry said.

Raskin, an attorney, was appointed in August 2007 as Maryland’s top banking regulator. She was previously managing director of Promontory Financial Group, a consulting firm, and worked at the New York Fed and as a counsel for the Senate Banking Committee. She graduated from Harvard Law School in 1986, the same year as Elena Kagan, Obama’s solicitor general. Her husband, Jamie Raskin, is a law professor and a Democratic Maryland state senator.

Peter A. Diamond’s career is no less distinquished. From Wikipedia,

Diamond was in 1968 elected a fellow and served as President of the Econometric Society. In 2003, he served as president of the American Economic Association. He is a member of the National Academy of Sciences and a Fellow of the American Academy of Arts and Sciences. Fellow of the American Academy of Arts and Sciences (1978), and Member of the National Academy of Sciences (1984), and is a Founding Member of the National Academy of Social Insurance(1988). Diamond was the 2008 recipient of the Robert M. Ball Award for Outstanding Achievements in Social Insurance, awarded by NASI.

With the election of these three new members, the Fed Board will look radically different from the previous Randian members…and point to a significant change in Fed policy.

This could be really interesting.


Written by Valerie Curl

March 14, 2010 at 9:00 AM

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