Esther George named for top job at Kansas City Fed

AP News
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Posted: Sep 15, 2011 3:04 PM
Esther George named for top job at Kansas City Fed

Esther George, the No. 2 official at the Federal Reserve Bank of Kansas City, has been picked for the top spot at the bank to succeed Thomas Hoenig, the Fed's longest-serving regional bank president.

George, 53, joined the Fed in 1982, serving as a bank examiner until 1995 when she began moving into executive positions in Kansas City, one of the Fed's 12 regional banks.

She was picked by the regional bank's board of directors to succeed Hoenig. He announced last March that he would step down on Oct. 1 when he would be 65, the mandatory retirement age for Fed bank presidents.

Hoenig dissented at all eight Fed meetings in 2010, arguing that the Fed's efforts to boost the economy through the purchase of billions of dollars in Treasury securities ran the risk of triggering inflation problems in the future.

George's views on monetary policy are not known. The Kansas City Fed president will have a vote on the Federal Open Market Committee, the panel of Fed board members and regional bank presidents who set interest-rate policies, again in 2013.

The voting spots on the board rotate among the 12 regional bank presidents with the exception of the president of the New York Fed, who always has a vote.

George will be joining the FOMC at a time when the panel is sharply divided. At the last meeting on Aug. 9, three regional bank presidents dissented from the decision adopted on a 7-3 vote to aim to hold interest rates at the current record low level for the next two years as long as the economy remains weak and inflation is subdued. It was the first time that there were as many as three dissents since late 1992.

Troy Davig, an economist at Barclays, said George's expertise in bank supervision would be an asset for the Fed as it implements the sweeping overhaul of bank regulations passed by Congress last year.

"In terms of monetary policy, she is coming from a tradition that has advocated more hawkish policies so we expect that her initial inclination would be to lean against policies calling for further monetary accommodation," Davig said.