White House Considering New Candidates for Open Fed Board Seat

(Bloomberg) -- White House officials are considering new candidates for at least one and possibly both empty seats on the Federal Reserve Board for President Donald Trump to nominate, according to people familiar with the matter.

White House Considering New Candidates for Open Fed Board Seat

Fed economist Nellie Liang withdrew from consideration earlier this month for one of the vacancies. Less clear is whether the White House will renominate Carnegie Mellon University economist Marvin Goodfriend.

Efforts the White House has made to contact potential new nominees show that, despite Liang’s withdrawal and the delay in a decision on renominating Goodfriend, the administration isn’t putting on hold appointments to the Fed board. The people who described the process asked not to be identified because no new nominees have been chosen.

Trump repeatedly attacked Federal Reserve Chairman Jerome Powell last year for raising interest rates, and Bloomberg News reported last month that the president had even discussed firing him. One way Trump can directly influence monetary policy is through nominations to the board, though anyone he picks must be confirmed by the Senate.

Trump nominated Goodfriend for the board in 2017, but the Senate didn’t vote on his confirmation. Goodfriend didn’t appear on a list of dozens of re-nominations the White House submitted to the Senate this year.

Goodfriend’s reputation as an inflation hawk may have damaged his standing with the president given Trump’s criticism of the central bank’s rate hikes last year. Following Trump’s attacks, any new choice for a governor’s seat would likely be highly scrutinized by investors on their political loyalties and capability to independently pursue the Fed’s dual mandate to seek both full employment and stable prices.

Trump nominated Goodfriend for a vacant Fed seat in November 2017 for a term ending 2030. The nomination languished in the Senate for much of last year. It lapsed at the end of 2018 when the previous Congress ended its term in office.

Goodfriend’s confirmation looked like a shoo-in until his Jan. 23, 2018, hearing before the Senate Banking Committee when he appeared ill-prepared for aggressive questioning by Democrats. The Senate panel narrowly and along party lines approved his nomination but it never progressed, with the Republican leadership unsure they could muster enough votes on the Senate floor.

Goodfriend is a widely respected monetary policy scholar. A former research director of the Richmond Fed, he faced opposition from some Democrats from the start because of his views emphasizing the importance of keeping inflation close to the Fed’s 2 percent target over its other mandated goal of maximizing employment.

Liang, who is now an economist at the Brookings Institution in Washington, was the first director of a financial stability oversight unit set up by former chairman Ben S. Bernanke. Her expertise in that area was seen as complimenting the previous White House nominees, and her profile as a woman and minority was seen as a plus given that the board only had one other woman on it at the time.

Her nomination was questioned by some Republicans who want to lighten regulations on banks, and Liang never sat for a hearing before the Senate Banking Committee.

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