(Bloomberg) -- Former Federal Reserve economist Nellie Liang withdrew from consideration for a seat on the central bank’s board of governors, the White House said Monday.
Liang dropped out of her own accord and wasn’t pressured by the White House, said a person familiar with the matter. There haven’t been any White House discussions of withdrawing the other pending nominee for a vacancy on the Fed board, Carnegie Mellon University professor Marvin Goodfriend, the person said.
While the Fed Board can operate quite easily with both positions vacant, her withdrawal may give President Donald Trump an opportunity to nominate someone whose views on interest-rate increases are closer to his own.
Trump for months has attacked Federal Reserve Chairman Jerome Powell for raising rates, and Bloomberg News reported last month that the president had discussed firing Powell, whom he nominated to the position. One of the ways that Trump can directly influence monetary policy is through nominations to the board, though anyone he picks must be confirmed by the Senate.
Trump tapped Liang, currently a senior fellow at the Brookings Institution in Washington, for the post in September. Her nomination caused unease among some Republican lawmakers over her role in helping to construct the post-crisis regulatory structure for banks. That, in turn, has triggered accusations that Wall Street’s biggest banks were out to block her nomination.
“One of the most qualified nominees to the Federal Reserve ever is now just a victim of Wall Street lobbying for much greater deregulation and much faster,” said Dennis Kelleher, president of Better Markets, a non-profit watchdog group in Washington. “This was a designated nomination kill.”
The White House and Liang both avoided pointing any fingers.
“We regret to announce that today Nellie Liang notified us that she has withdrawn from nomination to the Federal Reserve Board of Governors,” White House spokeswoman Lindsay Walters said in a statement. “We supported her nomination and believe she would have made a good Governor. We thank Nellie for her long career of public service and wish her well.”
Liang previously led a Fed board division in charge of financial stability policy and research, a unit created after the 2008 financial crisis by former chairman Ben Bernanke. She worked closely with former Fed Governor Daniel Tarullo in implementing provisions of the 2010 Dodd-Frank Act and other rules aimed at making the financial system safer.
“I have decided to withdraw my name from consideration to be a member of the Board of Governors of the Federal Reserve because the likelihood of a prolonged process could have left me in professional limbo for too long,” Liang said in an email.
Trump nominated Goodfriend in November 2017, but his nomination has languished in the Senate. Goodfriend’s confirmation looked like a shoo-in until his Jan. 23, 2018 hearing before the Senate Banking Committee when he appeared ill-prepared for an aggressive line of questioning by Democrats.
The Senate panel approved Goodfriend’s nomination but it never progressed, with the Republican leadership unsure they could muster the necessary votes on the Senate floor. It lapsed at the end of last year with the old Congress and the White House would have to renominate him if they want to keep trying to get him on the Fed.
“In the new Senate, Goodfriend could now have enough votes to win confirmation,” Capital Alpha analyst Ian Katz wrote in a note to clients. “But Trump may decide he would like to start again on both vacant Fed slots and look for candidates he’s confident would support lower interest rates.”
(Updates with Kelleher comment in sixth paragraph.)
--With assistance from Jeanna Smialek and Christopher Condon.
To contact the reporters on this story: Jennifer Epstein in Washington at firstname.lastname@example.org;Jennifer Jacobs in Washington at email@example.com
To contact the editors responsible for this story: Alex Wayne at firstname.lastname@example.org, Mike Dorning, John Harney
For more articles like this, please visit us at bloomberg.com
©2019 Bloomberg L.P.