Tuesday, 31 May 2016
Last updated 3 days ago
Jan 3 2012 | 4:51am ET
President Barack Obama has nominated a former Carlyle Group executive to the Federal Reserve Board.
Obama's selection of Jerome Powell is unusual: Powell is a Republican, and unlike the Securities and Exchange Commission, there is no requirement for political balance on the seven-member Fed. But politics appears to have everything to do with Powell's nomination.
There are currently two vacancies on the Fed, although one of the departing board members will stay on until a successor is confirmed by the Senate. Winning such confirmation for any position has been difficult for Obama, whose relations with Congressional Republicans are not exactly at a high point. Obama's last Fed nominee, Nobel Prize winner Peter Diamond, was blocked by Sen. Richard Shelby (R-Ala.), the ranking minority member on the Senate Banking Committee.
So Obama chose to pair his nomination of Harvard University economist Jeremy Stein, a Democrat, with that of Powell. Whether his ploy will succeed is unclear; Senate Republican leaders have not committed to confirming either nominee and appear to be in no rush to do so.
Powell was a partner at Carlyle from 1997 through 2005. He served as assistant Treasury secretary under former President George H.W. Bush in the 1990s and is now a visiting scholar at the Bipartisan Policy Center in Washington, D.C.
Powell, whose term would expire in January 2014, would be the only Wall Street veteran on the Fed board; former Morgan Stanley executive Kevin Warsh left the board in April.
Despite his Republican ties—Powell gave money to Obama's 2008 presidential rival, Sen. John McCain (R-Ariz.), and —Powell was critical this summer of his party's congressional leaders and their handling of the negotiations over an increase in the U.S. debt ceiling.
"I am by any fair reckoning a fiscal conservative," Powell, who in June wrote that a failure to strike a deal would create a "chaotic" situation, told Bloomberg Television in May. But a default is "just not a risk that you run."
"That doesn't mean you don't negotiate very hard to get additional spending cuts and get the deficit under control. You do. Bu that crosses the line into hostage take, I'm afraid, and is just tactically unacceptable."