Yellen, Raskin, Diamond may join Fed board

March 13, 2010|By The Washington Post

WASHINGTON — — With the expected appointment of Janet Yellen to be vice chairman of the Federal Reserve, President Barack Obama would be installing in the central bank's No. 2 spot a close ally of Fed Chairman Ben Bernanke and an economist who views supporting growth as the most immediate challenge ahead.

Yellen, currently president of the Federal Reserve Bank of San Francisco, is one of three people under consideration at the White House for appointment to the Fed Board of Governors. Sarah Bloom Raskin, the Maryland commissioner of financial regulation, and Peter Diamond, an economist at the Massachusetts Institute of Technology, are leading candidates for two vacant positions, sources said.

Raskin is in the final stages of vetting and is likely to be appointed, barring any last-minute hitches, a source familiar with the selection process said. The three nominations would likely be sent to the Senate together for confirmation.

Yellen would enter the vice chairman's job with deep knowledge of the Fed system and would likely play an important role in setting the course of monetary policy as part of Bernanke's inner circle.

The current vice chairman, Donald Kohn, plans to retire June 23.

Bernanke has viewed Yellen as a trusted confidante through the financial crisis and recession of the past two years. She has pushed her Fed colleagues to move more aggressively to support the economy. She has advocated a policy of ultra-low interest rates, viewing the risks of continued high unemployment as greater than those of inflation.

Raskin was previously a managing director of Promontory Financial Group, a Washington consultancy on financial regulation. Before that, she worked on the Senate Banking Committee staff and at the Federal Reserve Bank of New York.

She has gained a reputation in her job as Maryland's top bank regulator as an activist for consumer protection. She received the Consumer Advocate of the Year award in 2009 from the Maryland Consumer Rights Coalition.

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