Obama Leaves Key Spot Vacant Amid New Fed Nominations
By Donna Borak
President Obama announced three nominations to the Federal Reserve Board on Friday, but left a critical spot unfilled: a second vice chair in charge of bank supervision. The nominations of Stanley Fischer, former governor of the Bank of Israel, Lael Brainard, the U.S. Treasury Department’s past undersecretary for international affairs, and current Fed Gov. Jerome Powell are set to keep the board at seven members if they are quickly confirmed by the Senate. But none of the three nominees were named to the role of vice chair of supervision, a new position created under the Dodd-Frank Act. Since the passage of the regulatory reform law in 2010, the position has remained vacant, with Fed Gov. Daniel Tarullo acting unofficially in the role. Karen Shaw Petrou, a managing partner at Federal Financial Analytics Inc., said Fischer and Brainard would bring a critical perspective, while making it a more internationally-focused Fed board. In the coming year, U.S. regulators will have to work with foreign finance ministers and central bankers to iron out rules tied to global resolution, leverage and laws that will apply to foreign banks operating in the U.S., among others. “That’s been missing partly because of the crisis just forced a lot of focus on U.S. rules and then Dodd-Frank obviously is U.S. specific,” said Petrou. “The more we build out the U.S. framework, the more at odds it is with the global one in key markets like the European Union, and I think this is a critical piece of new business the Fed has to address, which is how international finance is going to be going forward.”