Trump Nominates Marvin Goodfriend for Fed Board Seat -- Update

By Nick Timiraos Features Dow Jones Newswires

President Donald Trump nominated Marvin Goodfriend a former Federal Reserve economist and current Carnegie Mellon University professor, for a spot on the central bank's board of governors on Wednesday.

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If confirmed by the Senate, Mr. Goodfriend would fill one of three vacancies on the Fed's powerful seven-member board.

Mr. Trump has also nominated Fed governor Jerome Powell to succeed Fed Chairwoman Janet Yellen when her term expires next February, and Ms. Yellen said last week she will resign her seat as a governor when Mr. Powell is sworn into office. That will give Mr. Trump another vacancy on the Fed's board in Washington.

Mr. Goodfriend, a widely respected monetary economist, would provide academic heft on a board that now has just two economists, including Ms. Yellen. He has criticized the Fed's buying of mortgage-backed securities as part of its postcrisis asset purchases aimed at lowering long-term interest rates. He has said the Fed should limit its bond-buying to Treasury securities except in limited circumstances when it has been given explicit permission by Congress.

In a March appearance before the House Financial Services Committee, Mr. Goodfriend said the Fed should welcome more oversight from Congress to enhance its credibility. He also recommended that Fed officials compare their policy decisions against a mathematical rule such as the so-called Taylor rule.

Mr. Trump has an unusual opportunity to put his stamp on the U.S. central bank early in his presidency. The position of the Fed's vice chairman is vacant after Stanley Fischer resigned last month citing personal reasons; his term was to expire next June.

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The Trump administration is in the process of searching for Mr. Fischer's replacement, and potential candidates include Mohamed El-Erian, an economist who has served as chief executive of Pacific Investment Management Co., or Pimco, according to a person familiar with the matter. That search is likely to focus on someone with a deep background in monetary economics, in part because Mr. Powell isn't an economist, said a person familiar with the search.

Mr. Trump has already filled one of the Fed's board slots. Randal Quarles, a top Treasury Department official in the George W. Bush administration, took office last month as the Fed's vice chairman for bank supervision.

One of the vacancies on the Fed's board must go to a community banker or a regulator of community banks.

The White House is considering the nomination of a Kansas banking regulator, Michelle Bowman, for that post, according to people familiar with the matter.

Mr. Goodfriend remains popular with conservative economists, including many who have been critical of the Fed in recent years, as well as influential Republican lawmakers. His nomination has taken on extra urgency because once Ms. Yellen retires from the Fed, the board will operate with only three members if no new nominees have been confirmed and seated.

"Certainly my colleagues and I would welcome additional appointments to the board," Ms. Yellen told lawmakers at a hearing on Wednesday. "And in fact, I don't think there has been any significant amount of time -- perhaps not ever -- that the board has operated with only three members. That is a very rare and difficult situation."

Write to Nick Timiraos at nick.timiraos@wsj.com

(END) Dow Jones Newswires

November 29, 2017 20:06 ET (01:06 GMT)