By Nell Henderson
Washington Post Staff Writer
Wednesday, May 16, 2007
President Bush will nominate two veterans of the banking industry to fill openings on the seven-member Federal Reserve Board of Governors, the White House said yesterday.
The nominations come as the Fed is talking to Capitol Hill lawmakers about how to modernize banking regulations and enforce fair-lending laws.
Bush plans to nominate Elizabeth A. Duke, 54, former chairman of the American Bankers Association and now the chief operating officer of TowneBank in Portsmouth, Va. Her company provides banking, real estate, insurance, asset management and other financial services.
The president also plans to nominate Larry Allan Klane, 46, president of global financial services at Capital One Financial of McLean, one of the nation's largest issuers of credit cards.
The White House also said Bush will nominate Fed Board member Randall S. Kroszner, 44, to a new term when his term expires in January. Kroszner, a former economics professor at the University of Chicago, is an academic expert in banking systems and has emerged as the central bank's point person on many banking issues since the departure from the board of Susan S. Bies in March and Mark W. Olson last June.
The Fed is one of five federal agencies that supervise the banking system. The Fed ensures that checks clear, it oversees more than 5,000 bank holding companies and about 900 state-chartered member banks, and has approval authority over bank mergers.
The Fed also enforces federal fair-lending laws. The central bank has been criticized by members of Congress who say it did not do enough to prevent the recent rise in home foreclosures, particularly in the subprime market, which caters to borrowers with low incomes, poor credit histories or other factors that put them at higher risk of default.
Fed Chairman Ben S. Bernanke, who succeeded Alan Greenspan in February 2006, came to the Fed without any banking experience, having spent his career as an academic economist specializing in monetary policy -- the adjustment of interest rates to control inflation and encourage economic growth.
"The board needs to have a range of experiences, including macroeconomics, financial markets and banking," said Brian Sack, vice president of Macroeconomic Advisers and a former Fed economist. The nominations of two bankers appear to be "an effort to get some balance in covering a range of needs the board has," Sack said.
The nominations are subject to Senate approval. If confirmed, Duke, would be the only woman on the board. All seven Fed Board governors are voting members of the central bank's Federal Open Market Committee, which sets interest rates. The presidents of the 12 regional Fed banks also participate in that committee's deliberations.
Efforts to reach Duke and Klane last night were unsuccessful. Fed nominees are routinely advised by the White House to make no public comments while their nominations are pending.