Alan Blinder Has a Nice Piece Calling for Fed Appointments
He writes:
Alan S. Blinder: Fed Vacancies and the Monetary Challenge: And then there were four. Well, not quite. Federal Reserve Vice Chairman Donald Kohn's recent announcement that he will retire in June will bring the Federal Reserve Board down to four members—unless the Obama administration gets some new members in place by then. Recent history is not propitious.... [V]acancies have become the norm in recent decades. President Obama has been content to live with two vacancies for the entire 14 months of his presidency to date. Under President Bush, the Fed was at full strength for only about three years out of eight—a low standard that almost exactly matched that of President Clinton.... Let's hope Mr. Obama breaks that pattern—soon. Why? Because... Chairman Ben Bernanke and his four (soon to be three) colleagues, along with the presidents of the 12 district Reserve Banks, face two enormously complex and consequential sets of decisions... the Fed's exit from its hyper-expansionary monetary policies... the post-crisis regulatory system.... Each of these two areas is replete with hazards and numerous questions on which reasonable people can disagree. And in each, mistakes can be quite consequential....
[I]t is imperative that President Obama appoint two distinguished and knowledgeable economists to the board as soon as possible... the president should be mindful of the fact that hawk-dove battles are starting to break out on the Federal Open Market Committee.... Today's FOMC is, on average, pretty hawkish. Mr. Obama will, I believe, want to create more balance....
[T]he Fed has a major regulatory job ahead of it. Economics will be useful here, too. But, specialization being what it is, the economists who would be most helpful on monetary policy will probably have little expertise on financial regulation. So President Obama would be wise to use one of his three nominations for someone deeply experienced in banking or financial regulation....
President Obama should start by nominating three highly-skilled technocrats. Then Senate Republicans should refrain from turning his nominations into a political circus. Well, a man can hope, can't he?
