The White House has been getting an earful in the past year from members of the Senate Banking Committee, who haven’t been shy about suggesting criteria for nominees at the Federal Reserve.
On Wednesday, Sens. Jeff Merkley (D., Ore.) and Elizabeth Warren (D., Mass.) continued with such unsolicited advice, sending a letter to President Barack Obama urging him to fill two vacant seats on the Fed’s seven-member board with nominees possessing an interest in financial regulation and a desire to address the problems revealed by the 2008 financial crisis.
“With [the Fed’s] responsibilities for oversight of the financial system, it is critical that the two remaining nominees for the Board be leaders who possess expertise in financial regulation and have demonstrated a strong commitment to financial reform,” the senators wrote in the letter.
The letter reflects the long-running concern of the senators that, with the exception of Fed Governor Daniel Tarullo, the highest-ranking Fed officials aren’t paying enough attention to the central bank’s considerable bank oversight responsibilities. They worry that too much of the work is delegated to staff as opposed to the officials who are accountable to Congress debating and engaging on these issues.
“I’m concerned that those responsibilities just aren’t a top priority for the Board of Governors,” Ms. Warren told Fed Chairwoman Janet Yellen at the latter’s confirmation hearing in November. Ms. Warren said that the Fed board should meet regularly on supervisory and regulatory issues, just as it does on monetary policy.
While Mr. Tarullo, who is the Fed’s point man on regulatory policy, “has worked tirelessly to lead the Board’s financial reform initiatives… he cannot do it alone,” the senators wrote in their letter to Mr. Obama.
The delivery of the letter to Mr. Obama coincides with the last day at the Fed board of Jeremy Stein, who is stepping down to return to teaching economics at Harvard. With his departure, the Fed board now has two openings with no named nominees. The president has nominated candidates to three other openings at the Fed. The Senate has confirmed one of those, Stanley Fischer, the former head of the Bank of Israel.
Two other nominees await Senate action: Lael Brainard, a former Treasury official; and Jerome Powell, a former investment banker who has served on the Fed board since 2012 and is up for a second term.
Mr. Merkley and Ms. Warren aren’t the only ones with an opinion about who the next two Fed nominees should be. Two separate groups of senators last month sent letters to Mr. Obama urging him to fill at least one of the vacant Fed seats with an official steeped in community banking experience. Mr. Merkley signed on to one of those letters, a bipartisan effort organized by Sen. Heidi Heitkamp, who is also a member of the Senate Banking panel.
Last summer, Senate Democrats helped sink Lawrence Summers’s bid to become the next Fed chief by communicating their displeasure in a variety of ways. When it appeared Mr. Summers might get the nod, more than one-third of senators in the Democratic caucus signed a letter praising Ms. Yellen and asking Mr. Obama to nominate her.
The death knell for Mr. Summers came when Sen. Jon Tester of Montana, a centrist Democrat on the Senate Banking panel, said he would vote against Mr. Summers should he be nominated.
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