Fed: Fischer In, Delays for Others

Published on May 20, 2014

Stanley Fischer, the Obama Administration’s nominee as Vice Chairman of the Federal Reserve Board, is certain to be confirmed by the Senate, perhaps as soon as later today in a voice vote immediately after the vote to invoke cloture scheduled for late this afternoon. At the latest, Fischer’s confirmation will come by Thursday morning.

*** It means Fischer will almost certainly be participating in the June 17-18 Federal Open Market Committee. The timing for the Senate floor votes to confirm Lael Brainard and reappoint Jerome Powell, however, is far less certain. That vote is more likely than not in June after next week’s Senate recess, perhaps just days before the June FOMC meeting. ***

*** In addition, the White House is understood to be planning to move forward with the remaining two nominees to fill out the seven-member Board sometime after Brainard and Powell are eventually confirmed. The two nominees may include Jason Furman, Chairman of President Obama’s Council of Economic Advisors, as well as a community banker. ***

Delays to Brainard and Powell

In theory the vote to end debate on Powell and Brainard’s confirmations could come by the end of this week if Senate Majority Leader Harry Reid files a motion for cloture later today or tomorrow. But in any case they are unlikely to be confirmed until June, after next week’s recess and barely days before the FOMC meeting.

The reason for nearly a month’s delay since the Senate Banking Committee voted April 29 to recommend their confirmation is the rising minority Republican ire over Democratic Senate Majority Leader Harry Reid’s management of the Senate. Last fall, Reid went “nuclear,” breaking with Senate tradition by barring filibusters on executive office nominations; more importantly, the Senate Majority Leader has also been disallowing Republican amendments on bills going to the Senate floor.

To retaliate, Senate Republicans have been stalling or delaying where possible White House nominations, be it the Fed, other regulatory agencies, and especially judicial appointments. It puts a premium on floor time, with life-time court appointments tending to draw priority in shepherding the nominations to what are in the end simple 51 vote majority confirmations when the floor votes are finally scheduled.

In the particular case with the nominations to the seven member Fed Board of Governors, Republican Senators Ted Cruz of Texas and Rand Paul of Kentucky — both 2016 presidential contenders — have threatened delays by demanding the full 30 hours of debate before each cloture and floor vote, and in Paul’s case until Reid allows a floor debate and vote on his Audit the Fed bill, which Reid has no intention of doing. Senate Minority Leader Mitch McConnell has been busy with his Kentucky primary vote being held today to ward off a Tea Party challenge to his right, and has been unable to clear the Fed votes for unanimous consent without debates.

Internal party and lobbying pressure does seem to have cleared the way for at least the Fischer nomination to go through, as the GOP does not want unfavorable publicity in undermining the operations of the central bank over what are arcane Senate issues like who fills the “amendment tree” or the altered filibuster rules.

The Board will be down to three Governors of Seven after Jeremy Stein steps down May 28 as expected to return to Harvard University. The Board has never had less than four Governors at any time since 1935, when the current Board structure was created.

Obama Set to Fill All Seven Board Seats

In addition, at some point within weeks after Brainard and Powell are confirmed, the White House is also understood to be planning to go forward with nominees to fill the last two of the seven seats on the Fed Board. We understand that one of the two may be Jason Furman, the current CEA Chairman. Janice Eberly, a former Treasury official who had been vetted as a nominee last fall, is understood to have withdrawn her name.

Furman’s confirmation, if it comes about, would go a long way in filling the intellectual gap being left by Stein’s departure. Furman’s nomination to head the CEA last year was endorsed in an unusual bipartisan show of support in a letter signed by eleven Republican economists, including Greg Manikw, Glenn Hubbard, and Phillip Swagel, who all served in economic posts under President Bush.

The other nominee is expected to be a community banker. Rebeca Romero-Rainey, a Hispanic community banker from Taos, New Mexico, who is considered the front-runner.

Once the two remaining slots are filled, as is likely even with renewed delays, it will mean President Obama has filled all seven seats on the Fed’s Washington-based Board of Governors.

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