Two nominees to the Federal Reserve’s Board of Governors were approved today by the Senate Banking Committee, advancing their appointments toward a possible confirmation vote by the full chamber.
The panel, in a voice vote, approved the nominations of Harvard University professor Jeremy Stein and Jerome Powell, an attorney and private equity investor who was a Treasury undersecretary for President George H.W. Bush. Republican senators James DeMint of South Carolina and David Vitter of Louisiana opposed both nominations.
Powell and Stein, who were nominated by President Barack Obama, at best face even odds of gaining final Senate approval, according to Sarah Binder, a senior fellow at the Brookings Institution in Washington. While the nominees aren’t assured of final approval, their advance is a “rare example” of cooperation in a presidential election year, said New York University’s Paul Light.
“To get someone approved by a committee and onto the floor is quite remarkable,” said Light, a professor of public administration who has advised lawmakers of both parties on improving the nomination process. “But it’s not a done deal because you could get a hold on any or all of them by a senator who has a beef with the Obama administration.”
Republican lawmakers may want to keep the two Fed positions open, believing they can fill the seats with their own selections after the Nov. 6 presidential election, said Binder, a political science professor at George Washington University who studies relations between the Fed and Congress.
The committee also approved three other nominees for financial regulatory agencies, including the Federal Deposit Insurance Corp.
Republicans have blocked nominees for financial regulatory jobs since Obama used a recess appointment to install Richard Cordray as the first director of the Consumer Financial Protection Bureau without formal Senate approval.
The nominations would need bipartisan support to pass in the full Senate. While Democrats control 53 votes in the 100- member chamber, Senate leaders would need at least 60 senators to gain final approval.
Vitter will object if Senate Democrats push to approve the nominations tonight, according to Luke Bolar, his spokesman. Vitter’s objection means the nominees will not be approved before the coming recess, as Senate rules would require the unanimous support of senators for confirmation.
“I refuse to provide Chairman Bernanke with two more rubber stamps who approve of the Fed’s activist policies,” Vitter said in an e-mailed statement.
DeMint won’t back Fed nominees who will “sign off on more debt and reckless actions,” Wesley Denton, spokesman for the senator, said in an emailed statement. “Americans need strong advocates for free markets and sound monetary policy.”
The Senate committee approved Richard Berner to be director of the Treasury Department’s Office of Financial Research and Christy Romero to be special inspector general for the Troubled Asset Relief Program. The Dodd-Frank Act created the OFR to support regulators in data collection and identification of systemic risk.
The panel also approved Jeremiah O. Norton, a Republican nominee to the five-member FDIC. Norton now becomes one of four would-be FDIC regulators awaiting a nod by the full Senate. The list includes Martin Gruenberg, who has been acting chairman and is awaiting confirmation as chairman.
Nobel Prize Winner
One of Obama’s earlier picks for a seat on the Fed, Nobel prize-winning economist Peter Diamond, withdrew his nomination in June 2011 in the face of Republican opposition.
Diamond’s nomination ran into opposition from Senator Richard Shelby of Alabama, the senior Republican on the Senate Banking Committee. Shelby said Diamond, a professor at the Massachusetts Institute of Technology, lacked the practical qualifications for the Fed job and experience regulating banks and managing financial crises.
When Powell and Stein appeared before the banking committee for their nomination hearings last week, they underscored their experience with capital markets. Powell highlighted his work as an investor and investment banker, and Stein discussed his research on the 1987 stock-market crash and the impact of monetary policy on the banking system.
The Fed’s board currently consists of Chairman Ben S. Bernanke and Vice Chairman Janet Yellen, both economists; Daniel Tarullo, a former professor at the Georgetown University Law Center; Sarah Bloom Raskin, a former top bank regulator for Maryland; and Elizabeth Duke, who had been a community banker.
If confirmed, Powell would fill the term vacated by Frederic Mishkin, which expires in 2014. Stein would fill the seat of former governor Kevin Warsh, with a term that lasts through 2018.
U.S. stocks posted their third straight decline today as the benchmark Standard & Poor’s 500 Index slumped 0.2 percent to close at 1,403.28 in New York. Ten-year Treasury yields fell five basis points to 2.15 percent.
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