Tomorrow, the Senate will hold hearings for President Obama’s three nominees to the Federal Reserve Board of Governors. His selections are, as expected, predicated on an economic policy that promotes expansionary monetary policy and interventionist fiscal policy.
Janet Yellen — Ms. Yellen is currently the President of the Federal Reserve Bank of San Francisco. She has been one of Fed Chairman Bernanke’s strongest supporters in his policy of keeping interest rates low and as the nominee to the open Vice Chair seat will continue in that role. She was talked about as a possible replacement for Bernanke, but instead will take the role of wing man and a four year term. At this rate, she’ll be up for another nomination before the Fed raises rates from their unnatural levels again.
Peter Diamond — Mr. Diamond is a well-known, frequently published economist who teaches at MIT and is a former professor of Bernanke. He brings a similar mind to the Fed as Bernanke, having spent a career studying risk in the economy and how the government can be used to mitigate those risks. Unfortunately, he, like Bernanke, is blinded by the Keynesian notion that a central authority can have enough knowledge to guide the market. Diamond has done significant work on social security, and if the Fed gives any voice to social security reform in the coming years, he will play a substantive role. Given his background in behavioral economics, he will likely also be involved in the new consumer functions of the Fed.
Sarah Bloom Raskin — Ms. Raskin fills the role of outsider on the slate nominated by the president. She is currently the chief banking regulator in Maryland. But, she isn’t really. She has spent several years on the Hill, including a stint as chief of staff for former Senate Banking Chairman Paul Sarbanes—yes, of the Sarbanes-Oxley Act debacle that destroyed countless billions in growth from oppressive, unnecessary, and unhelpful (didn’t slow the financial crisis down one second) regulatory burdens on small businesses.
See here for an interview I did in March on the politics of the nominations.