Standing in the wings to take on the role of acting Federal Reserve chairman if Ben Bernanke's star fades beyond rescue is one of the U.S. central bank's most seasoned yet low-key hands.
Having worked his way up through the system over a 40-year career, Fed Vice Chairman Donald Kohn, 67, knows the inner workings of the Fed and its little-seen but extensive corps of economic researchers as few others do.
If the Senate surprisingly rejects Bernanke in a full chamber vote or delays balloting past his scheduled first-term ending on Jan. 31, Kohn would almost certainly be asked by other members of the Fed board to step in as acting chief.
While the law is not crystal clear, Senator Christopher Dodd, the chairman of the Senate Banking Committee that backed Bernanke's nomination by a less-than-overwhelming 16-7 vote on Dec. 17, said Kohn should take the helm if Bernanke was not confirmed by the end of his term.
A vote by the full Senate — which is necessary in addition to the Senate Banking Committee's approval — has not yet been scheduled.
It was expected last week, but was delayed when a sudden bubble of resentment at Bernanke's role in dealing with the severe financial crisis that began in 2008 threatened to turn into a vote of denial.
The White House and key lawmakers, including Dodd, scrambled over the weekend to shore up support for Bernanke to try to ensure he was not the first nominee for Fed chairman in history to be rejected by the full Senate.
Following are some key facts about Kohn, who could find himself thrust into an unaccustomed limelight if the rescue bid for Bernanke falters or fails.
• A Philadelphia native, Kohn was sworn in as vice chairman in June 2006, after being nominated by former President George W. Bush to succeed Roger Ferguson and approved by the Senate. His term as vice chairman ends on June 23 and some observers have wondered how much longer he wishes to carry on.
• Kohn was named to the Fed's Board of Governors, which gives him a seat on the policy-setting Federal Open Market Committee, in 2002 for a full 14-year term that ends January 31, 2016. Somewhat unusually, he came from the ranks of Fed staff to the board, where he was a key lieutenant to then-Fed Chairman Alan Greenspan.
• With central banking credentials that date back to 1970, when he joined the regional Kansas City Federal Reserve Bank before moving to the Fed's Washington headquarters in 1975, Kohn's status as seasoned veteran is unchallenged. He worked his way through the ranks including the Fed's Research and Statistics Division to a spot as adviser to the board on monetary policy in 2001-02.
• Reserved in manner and careful in his speech, Kohn has generally presented a conservative economic policy view, emphasizing the value of research in setting direction, but has also shown a willingness to recant past opinions.
Last fall, he conceded that in the wake of the severe financial crisis, it might be worth considering whether asset "bubbles" like those than developed in real estate should be pricked in the future, notwithstanding Greenspan's view that doing so was not the Fed's job.
"My experience from the early 1980s through the early 2000s is that monetary policy shouldn't be addressing asset prices, but this has been a huge mess. We're still paying the bill for this mess," Kohn told a St. Louis audience.
• Kohn said in November, in what was seen as a defense of both past and current Fed policy, that current extended low interest rates were not setting the stage for another asset build-up but instead were vital to keep a slow-paced recovery going. He also opposed efforts in Congress to either limit the Fed's power by shifting some of its responsibilities elsewhere or making its decisions subject to audit.
© 2017 Thomson/Reuters. All rights reserved.