US Senate votes put Fed board at full strength

May 18, 2012

By Donna Smith

WASHINGTON, May 17 (Reuters) – The U.S. Senate on Thursday confirmed two nominees to the Federal Reserve, bringing its short-handed board up to full strength for the first time in six years as it wrestles with a tepid economic recovery and a revamp of financial rules.

The Senate voted 70-24 to confirm Harvard economist Jeremy Stein and 74-21 to confirm investment banker Jerome Powell.

The seven-member Fed board has been missing one or two members since 2006. During that time, it has contended with a virulent financial crisis and the deepest recession since the Great Depression, taking extraordinary actions to shore up the financial system and spur the economy.

Its aggressive and unconventional policies have put the Fed under intense scrutiny from conservatives who say it has been recklessly courting inflation. At the same time, some voices on the left argue it has done too little, with the unemployment rate at a still-lofty 8.1 percent.

“At this time when our economy is struggling to maintain forward momentum and the Federal Reserve is faced with difficult decisions about how to help the recovery without creating problems in the future, it’s critical we not leave the Fed undermanned,” Democratic Senator Charles Schumer said during a brief pre-vote debate.

Stein, who holds a doctorate in economics from the Massachusetts Institute of Technology, is a Harvard economist who served briefly as a senior adviser to Treasury Secretary Timothy Geithner. Stein, who specializes in stock price behavior and corporate investment and financing decisions, was also a staff member for President Barack Obama’s National Economic Council.

Powell, a visiting scholar at the Bipartisan Policy Center in Washington, is a lawyer with Wall Street experience. He worked at Bankers Trust, the Carlyle Group and Dillon Read after serving as a Treasury undersecretary in the administration of former U.S. President George H. W. Bush.

The Fed’s newest members are expected to be sworn in within several weeks.

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