It’s been difficult to keep track of the turnaround at the Federal Reserve lately. The Fed’s Board of Governors is operating with fewer than half of its positions filled. President Donald Trump recently announced two new nominations to the Board, bringing the total number of pending nominations to three, while leaving one vacant seat without a nominee.
Coinciding with the resignations of two Board members in 2017, President Trump nominated Randal Quarles to serve as Vice Chairman for Supervision, a seat created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, but left unfilled for several years. Fellow Trump appointee Jerome Powell was confirmed as Fed Chair in January 2018, leaving his previous seat vacant. Governor Lael Brainard, appointed by President Obama in 2014, could serve through 2028, when her term expires. Bottom line, four of the seven Board seats at the central bank are currently vacant.
Governors traditionally serve 14-year, staggered terms, beginning every two years – a structure designed to distribute appointments across multiple administrations. “The current number of open seats creates a unique opportunity for President Trump to significantly influence monetary policy,” said Tim Rood, Chairman of The Collingwood Group, a Situs company.
The three nominations awaiting Senate confirmation represent a diverse background of experience and relatively moderate views on the Fed’s role in driving monetary policy.
Last week, President Trump tapped conservative economist Richard Clarida to serve as Vice Chairman. Currently an economics professor at Columbia University, Clarida would bring an academic perspective to the Board. President Trump also announced his nomination of Michelle Bowman. As a Governor, Bowman would represent community banks. She is the acting Kansas Bank Commissioner and previously worked at Farmers & Drovers Bank.
Clarida and Bowman now join fellow nominee Marvin Goodfriend in the Senate confirmation queue. Goodfriend, a widely recognized monetary economist, is considered to be a somewhat hawkish candidate, favoring more aggressive actions to control inflation. He is currently a professor at Carnegie Mellon University and previously served as Director of Research at the Federal Reserve Bank of Richmond.
Goodfriend’s nomination was approved by a razor-thin margin by the Senate Banking Committee in February and he awaits confirmation by the full Senate. Sen. Jon Tester, a Montana Democrat not known for opposing Trump nominees, opposed his nomination based on Goodfriend’s comments at the nomination hearing denouncing the need for the federal government to guarantee 30-year fixed-rate mortgages.
“While it’s important that the Senate conduct a thorough confirmation process, it’s hard to imagine the Federal Reserve Board continuing to make critical monetary decisions with less than half of its positions filled,” said Rood. Even if all three appointments are confirmed, President Trump has yet to offer a nominee for the final vacancy.