Word came out in the press early on March 12 that San Francisco Fed President Janet Yellen would be the White House pick to become vice chairman of the central bank's board of governors. The choice was widely viewed as showing President Obama's support for Federal Reserve Chairman Ben Bernanke's low interest rate policy. Yellen, like Bernanke, has said she believes low rates are a key to ongoing economic recovery.
Although the administration hasn't formally submitted any names for confirmation, later on Friday it also said its other likely candidates for the open seats on the Fed board were Peter A. Diamond, a professor at MIT and expert on Social Security and pensions, and Sarah Bloom Raskin, an attorney who's the head of financial regulation for Maryland.
The fact that the three people weren't named outright as nominees may mean the administration is testing the waters by suggesting that each person is being reviewed for consideration. The New York Times reports that "The cautious language seemed in part a way to gauge reaction in Congress at a time when the central bank has faced intense criticism."
The Center of a Storm
Members of Congress have fiercely argued over whether the Fed was a cause of the financial crisis that brought on the Great Recession or the nation's financial savior. That has led to debate about whether the central bank's role in regulating the financial services industry should be cut. Many lawmakers have also been calling for the Fed to be "audited" so that the public has access to the detail of the bank's balance sheet and changes in it.
Bernanke has countered that some of the bank's actions require the utmost confidentiality and if they were public might cause a loss of confidence in some financial firms.
As a member of the Fed's rate-setting committee, Yellen is the only one among the three who has voiced her opinion about interest rates. It's likely that the administration has done what it can to vet the views of Diamond and Raskin. And it's unlikely the White House would push a nominee who would be likely to agitate for higher interest rates on his or her first day on the job.
More Names Emerge for the Fed's Board of Governor Openings