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February 10, 2006
Apparently I wasn't the only one confused
Bloomberg reports that the nomination of Kevin Warsh to the Board of Governors of the Fed is drawing some fire. (Hat tip: Division of Labour)
Feb. 10 (Bloomberg) -- Most of President George W. Bush's nominees to the Federal Reserve have earned accolades from across the economic and political spectrums.
And then there's Kevin Warsh.
Bush's nomination of the 35-year-old White House aide -- a lawyer by training who would become one of only two members of the Fed's seven-member board of governors without a Ph.D. in economics -- has been greeted by criticism and bewilderment by some former Fed officials and economists. They point to his political connections and inexperience, and say the White House could have found a better-known, more qualified choice.
``Kevin Warsh is not a good idea,'' said former Fed Vice Chairman Preston Martin, who was appointed by Ronald Reagan in 1982. ``If I were on the Senate Banking Committee,'' which must approve Fed nominees, ``I would vote against him.''
The same article also makes the following observation:
If Warsh and Kroszner are confirmed, Bush will have appointed all seven members of the Fed board.
True, but Roger Ferguson was appointed by Clinton to fill an unexpired term. Bush renewed him to a full term. The others... all Bush.
I expressed my confusion about the Warsh nomination at the time the news came out, saying I wasn't entirely sure what to make of it. I don't know what his views on monetary policy are. But the president has the right to appoint someone who he thinks will bring certain talents to the Board. There is no requirement that all the members be top-flight academic monetary economists. (Assuming Randall Kroszner is confirmed that would give us two high profile academics. Susan Schmidt Bies was in academia in the 1970s as well.) So I'm inclined to reserve final judgement until the hearings. But if I were on that committee I'd have some questions. I hope there will be some tough questions, because I'm still a little confused.
But should I get my hopes up for an in-depth inquiry into his qualifications, experience, and views on the economy? The article concludes,
While little is known publicly about Warsh's views on such Fed concerns as inflation, employment growth and the global economy, hearings on the nomination that are scheduled for Feb. 14 may shed more light. In any event, Senator Richard Shelby, the Banking Committee chairman, said in an interview that he expects an easy confirmation.
``He's very smart,'' the Alabama Republican said. ``He'll sail through.''
Necessary, but not sufficient.
UPDATE: Mark Thoma has a similar reaction.
UPDATE: Kip Esquire has more. Comments at Economist's View are decidedly negative. I think anyone nominated deserves a chance to sit in the hot seat. If I were on the committee I'd ask tough questions and if I didn't get good answers, I'd vote no. It's as simple as that. Same as I would say for anyone whose qualifications were unclear. I sure hope C-Span carries the hearings. It could be interesting.
Posted by William Polley at February 10, 2006 11:46 AM
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Comments
On the other hand there use to be a tradition of having bankers and/or businessmen on the board.
There is a very valid argument that we should have some non-economists on the board.
I'm not making any statement about Warsh's qualifications or suitableness.
Posted by: spencer at February 11, 2006 8:56 AM
Oh, I definitely agree. There would be nothing wrong with having a mix such as 2 economists, 2 bankers, 2 from the business world and 1 drawn from any of those categories. I would not want the board to be comprised entirely of academic economists.
And I'm not going to say Warsh is not qualified at this point either. But his resume does not tell us as much as the resumes of past nominees. Obviously resume length comes with age, so I wouldn't necessarily disqualify him. I just have lots of questions that I would ask.
Posted by: William Polley at February 12, 2006 3:01 AM