WASHINGTON – Three nominees for the Federal Reserve’s board expressed their support Thursday for the Fed’s efforts to bolster the U.S. economy. Their comments suggested that the Fed’s low-interest-rate policies will continue if they win confirmation.
Stanley Fischer, who has been nominated to be vice chairman; Lael Brainard, a former Treasury undersecretary; and Jerome Powell, a current board member who has been nominated for another term, all endorsed the Fed’s current policy stance under Chair Janet Yellen during a confirmation hearing before the Senate Banking Committee.
The committee chairman, Tim Johnson, D-S.D., described the three as “well qualified” and said it was important that the Senate confirm the nominees quickly to fill vacancies on the Fed’s seven-member board.
The three nominations were announced by President Barack Obama in January. His selections could reshape the Fed’s seven-member board under Yellen. She took over on Feb. 3, succeeding Ben Bernanke, who stepped down after eight years as chairman. Next week, Yellen will preside over her first policy meeting as Fed chair and will hold a news conference afterward.
Fischer, a former head of the Bank of Israel, would replace Yellen in the Fed’s No. 2 job.
“Achievement of both maximum employment and price stability requires the continuation of an expansionary monetary policy, even though the degree of expansion is being gradually and cautiously cut back,” Fischer told the committee.
Fischer, a dual citizen of the United States and Israel, was a longtime professor at the Massachusetts Institute of Technology. Bernanke and Mario Draghi, head of the European Central Bank, were among his students, as was former Treasury Secretary Lawrence Summers.
Brainard, who served as Treasury’s top international official in Obama’s first term, told the committee she would be “intensely focused” on safeguarding the Fed’s credibility in fighting inflation as well as “supporting its indispensable role in getting Americans back to work.”
Though Fischer has spent most of his career as an academic or government official, he was questioned by Sen. Elizabeth Warren, D-Mass., about the period from 2002 to 2005 when he was vice chairman of Citigroup Inc. She noted the close ties that past Treasury secretaries in Democratic administrations have had with the big bank. She asked Fischer if this could pose a conflict of interest.
Fischer said he thought his years at Citigroup were “extremely valuable” in providing useful insights that would make him a better banking regulator at the Fed. He has said he will divest his investments in Citigroup and other financial institutions if confirmed to the Fed’s board.
Sen. Charles Schumer, D-N.Y., agreed that Fischer’s tenure at Citigroup should be considered an asset rather than a liability because it gave him a better understanding of how the private sector operates.
Fischer and Brainard were tapped for the board for their expertise in international economics. Powell, a Republican, was first nominated to the board by President George W. Bush. Obama has nominated him for a full 14-year term.
During the hearing, no committee member voiced opposition to the nominees, who are expected to win quick Senate approval.
Sen. Mike Crapo, R-Idaho, asked Fischer whether he believed the Fed faced significant challenges in unwinding its economic support programs without disrupting the economy. Fischer replied that the Fed would monitor the financial markets’ reactions as it winds down its bond purchase program.
At the end of the hearing, Johnson said committee members would have a week to submit additional questions to the nominees. He said they should respond quickly so the committee could move to a vote.