HONOLULU — A vacationing President Barack Obama today nominated a Harvard University professor and a former Treasury official under President George H.W. Bush — a Democrat and a Republican — to the Federal Reserve Board of Governors.
In a statement from Hawaii, where he was vacationing with his family, Obama praised Jeremy Stein and Jerome Powell for agreeing to serve his administration at a critical moment for the U.S. economy.
“Their distinguished backgrounds and experience coupled with their impressive knowledge of economic and monetary policy make them tremendously qualified to serve in these important roles,” Obama said.
Stein is an economics professor at Harvard, where he teaches courses in finance. His research focuses on the behavior of stock prices, corporate investment and financial regulation. He previously served in the Obama administration as a senior adviser to Treasury Secretary Timothy Geithner.
Powell is a visiting scholar at the Washington-based Bipartisan Policy Center, where he has focused on federal and state fiscal issue. He served in the first Bush administration as undersecretary of finance at the Treasury Department, where he was responsible for policy on financial institutions and the treasury debt market.
In nominating both a Democrat and Republican to the seven-member Fed board, Obama could be trying to head off a confirmation fight in the Senate. The White House has previously accused Republicans of purposely blocking qualified nominees.
That includes Nobel Prize-winning economist Peter Diamond, who was nominated to the Fed board by Obama in 2009, then re-nominated to the post in 2010.
Republicans blocked a full Senate vote on Diamond’s confirmation and questioned his practical experience and research. Diamond is considered an authority on Social Security, pensions and taxation. Diamond ultimately withdrew his nomination, citing frustration with the process and contending that Republicans failed to recognize the value of experience analyzing what causes unemployment.
The Fed’s board of governors is made up of seven members who serve 14-year terms. Chairman Ben Bernanke is one of the seven members, though his term as chairman is limited to four years.
All members of the Fed’s governing board serve on its policymaking committee, known as the Federal Open Market Committee. The FOMC wields the Fed’s most powerful tool: It sets a benchmark short-term interest rate that affects the rates consumers pay for mortgages, auto loans and other borrowing.
The 12-member committee includes the seven members of the board and five of the 12 regional bank presidents. The President of the New York Fed, with its proximity to Wall Street, is a permanent member of the committee. Four additional regional presidents serve one-year terms on a rotating basis.
Obama’s nominations come as the policymaking committee shifts toward greater support for Bernanke’s efforts to revive the economy by keeping interest rates low.
In September, the Fed said it would swap some of its short-term Treasury securities for longer-term bonds, to try to push long-term rates lower. That followed the Fed’s announcement in August that it planned to keep its benchmark rate at a record low of nearly zero until at least mid-2013, as long as the economy remains weak.