Obama nominates two for Federal Reserve board
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Obama nominates two for Federal Reserve board
Adriene Hill: Now to Washington DC, where President Obama is offering up two new appointments to fill vacancies on the board of the Federal Reserve. One is a Harvard professor; the other is a former Treasury official from the Bush administration. Their backgrounds are very different, which could be a plus in getting their nominations through the Senate.
Marketplace’s Nancy Marshall-Genzer joins us live. Good morning Nancy.
Nancy-Marshall-Genzer: Good morning Adriene.
Hill: Nancy, why did President Obama choose these two, and why does he think they’ll have a chance of getting through the Senate?
Marshall-Genzer: Well, it’s a bipartisan nomination. He’s nominated a Democrat and a Republican. The Democrat is Harvard economist Jeremy Stein; the Republican is Jerome Powell. Now, Powell, as you mentioned, served in the first Bush administration.
The Senate rejected Obama’s last nominee for the Fed — that was MIT economist Peter Diamond. Senate Republicans said he was too much in favor of government intervention in the economy. So the thinking is, if Stein is sort of packaged together with the Republican Powell, they might both get through. But this isn’t the first time the administration has tried this — it tried a bipartisan nomination at the FDIC, and it didn’t work. Republicans blocked them.
Hill: Tell me a little bit more about Stein and Powell. What would they bring to the Fed?
Marshall-Genzer: Stein specializes in the behavior of stock prices; he’s called for more regulation. Powell is a lawyer. He worked on Wall Street after he left the Bush administration, and both Stein and Powell are considered experts on the financial markets.
Hill: If they are confirmed, how big of an impact would they have on Fed policy?
Marshall-Genzer: Well, Adriene, it’s not like they would immediately change those all-important interest rates that we all watch. It’s more that they would give advice on the markets to Fed chair Ben Bernanke.
I talked about this with Len Blum. He’s a managing partner at Westwood Capital.
Len Blum: Bernake’s pretty entrenched in the Fed and he’s going to get his policy passed. I think the Fed is going to keep rates as low as they are. It would be very dangerous with now to mess around with rates; the economy is so fragile.
So, consumers can still count on those low interest rates.
Hill: Marketplace’s Nancy Marshall-Genzer, thanks.
Marshall-Genzer: You’re welcome.
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