President Obama on Friday took another significant step toward making his mark on the powerful Federal Reserve, announcing he will tap Stanley Fischer, the former governor of Israel’s central bank and a mentor to many of today’s top minds in economics, to serve as the Fed’s vice chairman.
Only days after the Senate confirmed Obama’s nominee to lead the Fed, current Vice Chair Janet L. Yellen, the president also announced he would nominate Lael Brainard, a longtime Democratic economic policymaker and the Treasury Department’s former top diplomat, to serve as a Fed governor. He also is nominating Jerome Powell, a current Fed governor who served in George H.W. Bush’s administration, for a second term.
Given the Senate’s recent decision to lower the vote threshold for non-Supreme Court nominations, all the candidates are likely to join the Fed over the coming months. As a result, Obama will have fully shaped the Fed in the final three years of his presidency — when economic progress might depend as much on what the central bank does as on anything he is able to accomplish if Congress continues to prove resistant to new legislation.
“These three distinguished individuals have the proven experience, judgment and deep knowledge of the financial system to serve at the Federal Reserve during this important time for our economy,” Obama said in a statement.
“Stanley Fischer brings decades of leadership and expertise from various roles, including serving at the International Monetary Fund and the Bank of Israel,” Obama added. “He is widely acknowledged as one of the world’s leading and most experienced economic policy minds.”
Fed Chairman Ben S. Bernanke is expected to step down at the end of the month and be replaced by Yellen. But despite the high-profile turnover, the Fed is not expected to change direction, either when Yellen takes the helm or if Fischer and Brainard join.
With the unemployment rate at 6.7 percent, the Fed is starting to wind down its extraordinary stimulus campaign. Last month, it announced it would slow its monthly bond purchases to $75 billion per month, a modest $10 billion-per-month reduction that financial markets seemed to digest easily.
Fed officials have suggested they would stop asset purchases by the end of the year, though whether the slowdown itself would be tempered was an open question after Friday’s report that a meager 74,000 jobs were created last month.
As governor of Israel’s central bank, Fischer was credited with keeping the country’s economy stable through the global financial crisis of 2007 through 2009. He has also spent time as a senior official at the International Monetary Fund and the World Bank and worked in the private sector at Citigroup. He was a longtime professor at MIT, where he taught Bernanke and many other top economists.
Brainard spent about four years as Treasury’s undersecretary for international affairs, its top official focused on global economic and financial policy. In that role, she helped manage the U.S. response to the sovereign debt crisis in Europe and economic affairs with China and other key countries. She also worked at the Brookings Institution and in the Clinton administration. She was a professor at MIT early in her career.
“Lael Brainard has served as one of my top and most trusted international economic advisers during a challenging time not just at home, but for our global economy as well, and her knowledge of international monetary and economic issues will be an important addition to the Fed,” Obama said in the statement.
Powell joined the Fed in 2012 after a career that included time as a lawyer, an investment banker and a top Treasury official in George H.W. Bush’s administration. He also was a scholar at the Bipartisan Policy Center.