Obama’s Possible Picks for Fed Board Would Expand Ranks of PhD Economists
The president’s choices are Jeremy Stein, a Harvard University professor who specializes in banking and finance, and Richard Clarida, an executive vice president at Pacific Investment Management Co., said the person, who spoke on condition of anonymity because the selections haven’t been announced.
If the nominations are approved by the Senate, Obama will have appointed or reappointed six of the seven Fed board members, including Chairman Ben S. Bernanke. The chairman led a decision this week to hold the key interest rate near zero at least through mid-2013 to support a recovery described as “considerably slower” than policy makers anticipated.
Three regional bank presidents dissented from this week’s decision. Minneapolis Fed President Narayana Kocherlakota, along with Charles Plosser of Philadelphia and Richard Fisher of Dallas, said they wanted to maintain the prior commitment to low borrowing costs for an unspecified “extended period.”
The FOMC consists of the Fed’s Washington-based board as well as the president of the Federal Reserve Bank of New York plus four the remaining 11 reserve bank presidents on a rotating basis.
White House spokesman Matt Lehrich said in a statement that Obama “is considering a range of highly qualified nominees for the Federal Reserve but has not made any decisions about whom he would appoint to fill these critically important openings.”
The Wall Street Journal reported Obama’s plans for filling the Fed Board seats yesterday.
Stein, 50, served in the Obama administration from February to July of 2009 as a senior adviser to Treasury Secretary Timothy F. Geithner and as a staff economist on the White House’s National Economic Council.
Clarida, 54, worked at the Treasury Department from February 2002 until May 2003, serving under President George W. Bush as assistant secretary for economic policy, a position that required Senate confirmation. He provided Treasury Secretary John Snow with advice on the domestic and global economies, international capital flows, corporate governance and the maturity structure of U.S. debt.
Improving the Odds
Nominating a former Bush administration official along with one who served under Obama may improve the chances of confirmation, Zandi said. “There are reasonably high odds that they would get through the process,” he said.
Obama’s most recent pick for a seat on the Fed, Nobel prize-winning economist Peter Diamond, withdrew his nomination in June after it ran into opposition from Senator Richard Shelby of Alabama, the senior Republican on the Senate Banking Committee. Shelby said Diamond, a professor at Massachusetts Institute of Technology, lacked the practical qualifications for the Fed job and experience regulating banks and managing financial crises.
Only two of the board’s five current members, Bernanke and Vice Chairwoman Janet Yellen, hold a PhD in economics. Stein earned his doctorate from the Massachusetts of Technology, where Bernanke served as a visiting professor, although the two didn’t overlap. Clarida earned his degree at Harvard.
Stein’s research topics include corporate investment and financing decisions, risk management, stock-market efficiency and capital allocation inside companies.
At Newport Beach, California-based Pimco, manager of the world’s biggest mutual fund, Clarida is an executive vice president in charge of the New York office and is the company’s global strategic adviser. Clarida has published articles on exchange rates, interest rates and international capital flows. He is a member of the National Bureau of Economic Research, where Stein is a research associate.
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