Three nominees for the seven-member Federal Reserve Board probably won’t be considered for confirmation by the Senate this month even with an impending monetary policy meeting on June 17-18, a Senate aide said.
Nominees Stanley Fischer, Lael Brainard and Jerome Powell probably won’t be confirmed this month because of Republican opposition and the limited time before a week-long recess beginning May 26, according to a congressional aide. Republican Senator Rand Paul of Kentucky has threatened to stall the nominations, which were approved by the Senate Banking Committee on April 29.
If the nominees aren’t approved next week, holding a confirmation vote before the next meeting of the Federal Open Market Committee will be a top priority after the recess, the person said. No vote has been scheduled.
Senate Democrats can confirm the Fed nominees without any votes from Republicans. Majority Leader Harry Reid, a Nevada Democrat, altered Senate rules last year so that almost all nominees can be confirmed with a simple majority, effectively stripping Republicans of the power to block nominations in a chamber where Democrats control 55 of 100 seats.
Paul, a possible presidential contender in 2016, threatened this week to stall the nominations unless the Senate gets a chance to vote on his bill calling for public audits of Fed monetary policy. He said in a letter to Reid he would object to any move to vote on the people picked by President Barack Obama to fill Fed board vacancies. He said his measure should be considered with the nominees.
Fed Governor Jeremy Stein has said he will leave the Fed on May 28 to return to teaching at Harvard University. His exit will leave the board for the first time in its history with just three of seven governor positions filled: Chair Janet Yellen, Daniel Tarullo, and Powell, who is being re-nominated for a second term.
Even with the three nominees approved, the White House would still have two more board seats to fill. Yellen has said she favors having another community banker join the board after two members with experience in the industry, Elizabeth Duke and Sarah Bloom Raskin, left over the past eight months.
Fed policy makers last month said the economy is showing signs of picking up and the job market is improving. The policy-setting Federal Open Market Committee pared its monthly asset-buying to $45 billion, its fourth straight $10 billion cut, and said further reductions in “measured steps” are likely. Interest rates will probably remain low until mid-2015.
The Fed board has always had at least four of its seven seats filled since the central bank’s current structure was established by Congress under the Banking Act of 1935. Board members share the power to set monetary policy with the presidents of the 12 regional reserve banks.
Governors have seven votes on the FOMC. Fed district bank presidents share four votes on a rotating basis, with the president of the Federal Reserve Bank of New York holding a permanent committee seat.
The board’s current makeup of four governors until Stein’s departure is one of just three times in history that it’s been so thinly staffed. The only other instances since the 1930s were in 2009 and 2010.
Fischer, 70, is being nominated to be the Fed’s vice chairman, the job Yellen held for three years before she succeeded Ben S. Bernanke in February. Fischer previously served as head of the Bank of Israel and the No. 2 official at the International Monetary Fund. Brainard is a former U.S. Treasury undersecretary for international affairs.