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March 08, 2010

Filling the Fed's Vacancies

Posted by David Zaring

The Federal Reserve has quite a few vacancies - indeed, it appears that Obama will soon be able to name a majority of its seven governors. We told you about Donald Kohn - bureaucrat who made it to governor - here. What's surprising is that there aren't many internal candidates mooted for the next set of vacancies - surprising because internal candidates are harmless, given the importance of running against Wall Street these days. Anyway, the Times has a preview here; it's kind of interesting.

But if it does, in fact, make a difference who is on the Board of Governors, it is worth noting that, like much of the regulation of finance, it will be because of a totally opaque change of custom, rather than anything related to their statutory powers. Alan Greenspan probably didn't remember who was on his Board, let alone consider lobbying them, and he's not the first in a line of imperious chairs of the bank, as Paul Volcker could attest. Ben Bernanke has tried to create a more collegial board, but that's purely his custom.

Of course, given the way that Treasury makes decisions - not with the sort of care and attention to the constraints of the Administrative Procedure Act and D.C. Circuit that, say, the EPA or SEC must do things - there might be reason to believe that financial regulation depends a lot more on these sorts of customs than does other sorts of regulation.

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