Fed governor Elizabeth Duke to step down


Elizabeth A. Duke, a Federal Reserve governor who helped steer bank regulation through the financial crisis and its aftermath, is stepping down next month. (Joshua Roberts/BLOOMBERG)
July 11, 2013

Elizabeth A. Duke, a Federal Reserve governor who helped steer bank regulation through the financial crisis and its aftermath, is stepping down next month.

Duke, a former bank executive, took office in August 2008, just before the global financial system entered near-collapse. She was particularly active in a series of decisions over extending the Fed’s regulatory umbrella to a broader range of institutions. Duke will leave her position around Aug. 31, she said in a letter to the White House released by the Fed.

“I believe that history will judge that the Federal Reserve . . . met every test in a thoughtful, innovative and effective way,” Duke wrote.

Her term had expired in January 2012, but she was allowed to continue serving until her replacement was nominated and confirmed. However, the White House has not nominated anyone else for the slot.

“President Obama is grateful to Elizabeth Duke for her years of valued service,” an administration spokesperson said.

Her resignation comes amid much speculation that Chairman Ben S. Bernanke will step down from the helm of the central bank once his term ends early next year. The vacancies would give the White House the opportunity to shape the top tier at the Fed. Duke was the last governor remaining who was not appointed by Obama.

But nominees must also be confirmed by the Senate, where they could get trapped in partisan crossfire. Republicans have refused to approve Obama’s picks to head the Consumer Financial Protection Bureau, Environmental Protection Agency and Federal Housing Finance Agency, for example. That said, the presence of two empty seats at the Fed could make it easier for the Obama administration to negotiate a deal with Republicans, said Isaac Boltansky, policy analyst at Compass Point Research & Trading.

“It really gives more latitude for the White House to get their nominee to become chair through,” he said.

Duke is one of only eight women ever to have served on the Fed’s board of governors. Two others are current members: Janet Yellen, vice chairwoman of the Fed’s policymaking committee, and Sarah Bloom Raskin, who was appointed in 2010.

Duke often displayed an independent streak, including a rare public dissent on a bank regulatory matter in December 2008. She voted against GMAC’s application to become a bank holding company. The Fed, however, ultimately approved the proposal, allowing the troubled auto financing firm to tap $6 billion in government bailout funds. Duke, in addition, was an internal skeptic of some of the Fed’s unconventional efforts to use monetary policy to boost the economy, though she reliably voted for the policy choices embraced by Bernanke.

The Fed chairman’s “considerable personal strengths proved to be invaluable during very difficult economic times,” Duke wrote in her resignation letter.

The Fed did not comment on Duke’s future plans. Before joining the board, she served as chief operating officer at TowneBank, a community bank based in Suffolk, Va. She was also the first woman to head the American Bankers Association, an industry trade group.

Ylan Q. Mui is a financial reporter at The Washington Post covering the Federal Reserve and the economy.
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