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Comment: Back to the drawing Board of Governors

It is back to the drawing board for the White House in filling empty seats on the Federal Reserve Board of Governors. Nominee Nellie Liang has withdrawn from consideration to avoid being left in “professional limbo” during a protracted confirmation process. It may well have been an accurate assessment of what she would face. The nomination of Marvin Goodfriend has dragged on since first being put forward in November 2017. He had to be renominated in January 2018 at the start of a new Congressional session and fared poorly in his nomination hearing in February. While he was narrowly approved by the Senate Banking Committee for a confirmation vote by the full Senate, that vote has never been scheduled. Thus, Goodfriend’s nomination requires refreshing at the start of the 2019 Congressional year. Unless President Trump nominates him again – which seems doubtful at this point – there are once more two unfilled terms for Governor (ending January 31, 2024 and 2030).

While the White House may have plenty of options on who to nominate, it may find it difficult to thread the needle of finding someone whom the President would consider sufficiently loyal to his interests while also being both suitable for the Board and capable of navigating the confirmation process. The confirmation hearing invariably includes questions under oath about support for the independence of the central bank that would be at odds with someone too deeply connected to the Trump Administration.

I would anticipate that nominations for the Board will get scant attention as long as the partial federal government shutdown lingers. Even if a name or two is put forward by the White House, the Senate will have little attention to spare until it is resolved.

It is undesirable that the Board remain understaffed and stretched in performing its assigned duties. However, it has been years since all the seats were full and having two empty ones is not a crisis. Should one of the current governors leave, that could change.

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