Fed: Board Transitions

Published on June 28, 2017

Contrary to recent press reporting the White House is struggling to fill the community banker slot on the Federal Reserve Board of Governors, we understand that the nomination of Indiana banker Robert Jones is moving forward and will be formally announced in the coming weeks.

Jones, who goes by Bob rather than Robert, is currently Chairman and CEO of Old National Bancorp, based in Evansville, Indiana. He has been involved in retail and community banking since 1979, working his way up through a series of mergers to become Old National’s CEO in 2004 and its Chairman since May 2016.

Jones also served on the Board of Directors at the Federal Reserve Bank of St. Louis. His nomination was strongly supported by Vice President Mike Pence.

His vetting is already underway and though it will still probably take several more weeks to complete, no problems are expected. The vetting process is likewise well underway on the nomination of Carnegie Mellon professor Marvin Goodfriend (see SGH 6/9/17, “Fed: On the Goodfriend Nomination”), and all but completed for Utah-based banker Randal Quarles, who will be nominated for the Board’s Vice Chair position for Banking Supervision.

If the vetting for all three nominees goes smoothly, the White House still intends to present all three for confirmation hearings before the Senate Banking Committee, hopefully before the August recess. At least on paper, the trio of Trump nominees to the Fed could be confirmed by the Senate in time to attend the Federal Open Market Committee’s pivotal September 19-20 meeting.

The FOMC two-day meeting ending November 1, however, is the more likely first FOMC meeting that will be attended by the three Trump nominees as voting members of the Committee.

For one, the Senate floor schedule in September is going to be is extremely crowded, with major legislative battles looming to pass some form of a FY2018 budget or Continuing Resolution to avoid an October 1 government shutdown, not to mention a must-pass increase in the federal debt ceiling.

That may make it problematic to squeeze in a Senate floor vote on the Fed appointments before well into October, or even for Fed confirmation hearings if the Banking Committee fails to hold the hearings in July.

There is also a backlog of other confirmation votes ahead of the Fed nominees in the queue for Senate confirmation votes. David Malpass, the Administration’s nominee as Treasury Under-secretary for International Affairs, and at least four other nominees to senior Treasury positions are awaiting floor scheduling for their Senate confirmation votes.

And we understand, in any case, there is no particular sense of urgency at the White House to rush the Fed appointments. Financial deregulation is the one area within the Fed’s purview the White House is pressing on, but while Chair Janet Yellen has pushed back against the need for extensive revamp of Dodd Frank, Fed Governor Jerome Powell has indicated in recent speeches the Fed can and is likely to ease back on how the new regulations are interpreted and implemented, especially when it comes to the smaller to medium sized banks.

None of the three pending appointees to the Board are being considered as potential successors to Chair Janet Yellen. The White House search for the next Fed chair, being headed by National Economic Council Chairman Gary Cohn, has in fact barely begun and is likely to continue well into the fall and towards the end of this year.

If Chair Yellen is not reappointed to a second term, we would not rule out her being asked to extend her term as Chair for a few months into the spring next year. There will be possible, if not probable, delays to selecting and vetting a new Chair, and then getting the nominee confirmed by the Senate before the end of her current term as Chair.

A brief period as an “acting” Chair of the Fed has happened before. In 1996, then President Bill Clinton did not formally reappoint Alan Greenspan to his third term as Fed chair until February, just days before his term as chair ended, and the Senate did not confirm Greenspan until June 20 that summer.

Back to list