Tags: Federal Reserve | Yellen | governors | FOMC

Fed Board Set to Operate with Only Three Governors

By    |   Tuesday, 13 May 2014 12:13 PM

The Federal Reserve Board is supposed to have seven governors, but it will only have three as of May 28 unless the Senate approves at least one of President Obama's three nominees before then.

Gov. Jeremy Stein is leaving the central bank on that date. A drop to three governors would be a first in Fed history and threatens to hamper the institution, The New York Times reports.

Stein is now the only member of the committee that watches for problems in financial markets. He's also the only member of the committee that oversees how banks deal with their customers.

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The three nominees are waiting to be confirmed by the Senate, but that may not happen before May 28. Senate Republicans may be reluctant to assist Obama in filling out the Fed board.

A three-person board would shift policymaking power from presidential appointees confirmed by Congress to regional Fed bank presidents selected by business leaders in each district. Some experts aren’t happy about that prospect.

"Congress created an FOMC with a majority of presidential appointees on it, and it would be unfortunate not to continue that and to honor that,” former Fed vice chairman Donald Kohn told the newspaper. “It seems to me consistent with democratic accountability.”

Meanwhile, Fed Chair Janet Yellen made clear in her congressional testimony last week that the Fed isn't looking to raise interest rates anytime soon.

"A high degree of monetary accommodation remains warranted," she said, according to Bloomberg. "Many Americans who want a job are still unemployed," and inflation remains below the Fed's 2 percent target.

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The Federal Reserve Board is supposed to have seven governors, but it will only have three as of May 28 unless the Senate approves at least one of President Obama's three nominees before then.
Federal Reserve, Yellen, governors, FOMC
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2014-13-13
Tuesday, 13 May 2014 12:13 PM
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