Senate committee backs 2 nominees for Fed's board

AP News
Posted: Mar 29, 2012 7:50 PM
Senate committee backs 2 nominees for Fed's board

A Senate committee on Thursday approved President Barack Obama's two nominations to fill vacancies on the Federal Reserve's board. But prospects for a quick confirmation in the full Senate are uncertain.

On a voice vote, the Senate Banking Committee backed the nominations of Jeremy Stein, a Harvard economics professor, and Jerome Powell, an investment banker who served in the George H.W. Bush administration.

Obama had nominated Stein, a Democrat, and Powell, a Republican, in hopes that pairing nominees from both parties could overcome Republican objections. The Fed board hasn't operated with a full seven members since 2006.

But one Republican senator, David Vitter of Louisiana, a critic of the Fed's policies under Chairman Ben Bernanke, has expressed opposition. That won't necessarily block the nominees' confirmation. But it means the Senate won't vote before its two-week break starts this weekend.

Vitter, R-La., has criticized the Fed's efforts to keep interest rates at record lows to encourage borrowing and strengthen the economy. He and other opponents argue that the Fed's actions have raised the risk of high inflation once the economy strengthens. Vitter announced this week that he would oppose the two nominations.

"I refuse to provide Chairman Bernanke with two more rubber stamps who approve of the Fed's activist policies," he said in a statement.

Bernanke has argued that the Fed's actions have been necessary to support an economy that's still growing only modestly and grappling with historically high unemployment.

Vitter said he would block any effort to advance the nominations in an accelerated process that can occur only if every senator agrees. The Senate will take up the Fed nominations after it returns from its break in mid-April.

The Senate committee approved three other nominations Thursday: Jeremiah Norton, as a member of the board of the Federal Deposit Insurance Corp.; Richard Berner, to head the new Office of Financial Research at the Treasury Department; and Christy Romero as special inspector general for the Troubled Asset Relief Program, the government's financial rescue effort.

The Senate later Thursday did approve the nomination of Thomas Curry to serve as head of the Office of the Comptroller of the Currency, a position that also gives him a spot on the FDIC board. The Senate also approved the nominations of Martin Gruenberg, Thomas Hoenig and Norton to serve on the FDIC board. Romero's appointment as TARP inspector general was also approved.

Gruenberg is serving as acting head of the FDIC and Hoenig, the former head of the Kansas City Federal Reserve Bank, has been nominated as FDIC vice chairman. The FDIC leadership posts will require a separate Senate vote, although Gruenberg will continue serving as acting FDIC chairman until that occurs.

Senate Banking Committee Chairman Tim Johnson, D-S.D., said in a statement that it was critical for the Senate to move as quickly as possible to fill all the financial nominations that have been approved by his committee.

Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky. said the financial regulatory nominations _ and several dozen others _ were approved Thursday after the White House agreed it would not bypass the Senate to make appointments during the traditional Easter-Passover recess in April.

Republicans were furious when President Barack Obama bypassed the Senate in January to make four appointments. Republicans argued at the time the Senate was not actually in recess.

It isn't clear how many Senate Republicans will oppose Obama's two Fed nominees after the congressional break.

As a professor, Stein has specialized in financial regulatory issues. Powell, a visiting scholar at the Washington-based Bipartisan Policy Center, was Treasury undersecretary of finance for President George H.W. Bush.

The Fed's seven-member Fed board had to address the 2008 financial crisis with just five members. An earlier Obama nominee for a Fed board seat, Peter Diamond, a Nobel Prize winner, asked the White House to withdraw his nomination last year after Republicans had blocked it for a year.


Associated Press reporter Larry Margasak contributed to this report.