Obama plans to nominate 3 Fed governors

By Neil Irwin
Thursday, April 29, 2010

President Obama plans to nominate three new Federal Reserve governors Thursday, an administration official said, seeking to fill out the central bank's leadership at a delicate time for the economy and a time of uncertainty for the Fed's mission.

Obama will nominate Janet Yellen, currently president of the Federal Reserve Bank of San Francisco and a close collaborator with Fed Chairman Ben S. Bernanke, as vice chairman of the Fed. He will also nominate Sarah Bloom Raskin, Maryland's commissioner of financial regulation, and Peter Diamond, an MIT economist, to be Fed governors.

The White House had previously confirmed that the three were under serious consideration for the Fed slots, but now a formal nomination is imminent, according to the administration source, who would only speak on the condition of anonymity before the official announcement. All three would need to be confirmed by the Senate.

If all three were confirmed, the Fed would have its first full slate of seven governors in four years. There are currently two vacant Fed positions, for which Raskin and Diamond are to be nominated, and Fed Vice Chairman Donald L. Kohn plans to retire in June, to be replaced by Yellen.

Yellen, 63, has a long history in Washington and in the Federal Reserve system, including as a top economic adviser to President Clinton and then as a Fed governor in the 1990s. An expert on labor markets, she has been among the wing of Fed officials most eager to act aggressively to combat the economic downturn, while playing down the risk of inflation.

Raskin, 49, has been Maryland's top bank regulator since 2007, and before that worked at the consultancy Promontory Financial Group, the Senate banking committee and the New York Fed. She has drawn praise from consumer groups for her efforts to prevent abusive lending practices.

Legislation now under debate in the Senate would reduce the Fed's role as a bank regulator to overseeing only the largest institutions, though it would also create a new consumer protection regulator as part of the Fed and give it expanded responsibilities to oversee the health of the financial system as a whole.

Diamond, who turns 70 on Thursday, is an expert on Social Security and pension systems, areas outside the normal focus of the Fed, and has collaborated with Obama budget director Peter Orszag on research. He is not well known among the sometimes insular world of monetary economists and Fed officials, though administration officials view him as a creative thinker who could bring fresh eyes to the challenges facing the central bank in a time of economic uncertainty.

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