Liberal senators call for finance watchdogs to fill Fed vacancies

A pair of liberal senators is pushing President Obama to fill vacancies at the Federal Reserve with tough Wall Street watchdogs.

Sens. Elizabeth Warren (D-Mass.) and Jeff Merkley (D-Ore.) urged Obama to prioritize financial oversight over monetary policy expertise when it comes to picking candidates to fill two remaining vacancies at the Fed.

The pair, tough critics of big banks themselves, argued that the Fed now has expanded responsibility to monitor the financial sector since the passage of the Dodd-Frank financial reform law. While a central part of the Fed’s job is to steer the nation’s economy via monetary policy, they argued that it is critical the two spots be filled with experienced financial experts.

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“Financial regulation and oversight obligations must be front and central to the board’s work now and going forward, which should be reflected in the new makeup of the board,” they wrote.

The two did not name specific candidates but laid out broad criteria for who, in their mind, would fit the bill. That list includes individuals who played a role in investigating the financial crisis and crafting laws and regulations addressing it. They also said those with experience at financial regulators, relevant congressional committees or academia could also qualify for such a job.

Several lawmakers in both parties have pushed Obama to name a community banker to one of the two remaining spots, and the administration is reportedly vetting candidates in that field. Warren and Merkley said a community banker could meet their qualifications, as long as he or she showed a “strong commitment to a level playing field for the Main Street economy.”

While the Fed has been granted broad new powers to oversee the financial sector under Dodd-Frank, the White House has been slow to fully enable those abilities. The reform law created a specific position at the Fed devoted to financial regulation, but Obama has yet to nominate anyone to fill it. Fed Governor Daniel Tarullo has been taking the lead on financial regulation matters in the meantime, in an unofficial capacity. But Warren and Merkley said in their letter that he needs backup.

“Governor Daniel Tarullo has worked tirelessly to lead the board’s financial reform initiatives,” they wrote. “But he cannot do it alone. Financial stability and regulatory issues are of the highest importance and should have adequate board membership to give serious attention to those efforts.”

The senators’ push came on the same day the Fed filled one of its several vacancies. On Wednesday, Stanley Fischer was sworn in as a Fed governor, one week after he was confirmed by the Senate. He still needs to be confirmed separately by the Senate to become the Fed’s vice chairman.

A pair of other Fed nominees are still pending before the full Senate: Lael Brainard, a former Treasury official, and Jerome Powell, who is currently at the Fed but is seeking confirmation for a full term.

The letter came the same day Jeremy Stein resigned from the Fed. Stein, a Harvard academic, announced in April he would be stepping down to rejoin the faculty there.

That means that the Fed still has two vacancies to be filled with nominees, and three open seats currently as Brainard awaits her confirmation.