Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe
ECB’s big bazooka
Next week’s main event is, of course, the European Central Bank’s second offer of cheap three-year loans.
Attention is fixed on whether the take-up will be greater or less than in December, when the central bank loaned €489bn. Read more
The good news today was that Janet Yellen and Sarah Bloom Raskin were both sworn in today by Ben Bernanke as Federal Reserve governors, meaning the top echelon of policymakers at the US central bank is nearly complete. Six seats on the seven-member board have now been filled, and Ms Yellen can now take up her position as vice-chair replacing the retiring Don Kohn.
Although Ms Raskin and Ms Yellen have enjoyed a relatively smooth ride through the confirmation process in the Senate, their colleague Peter Diamond of the Massachusetts Institute of Technology is having a much tougher time. Following grumblings about his suitability for the job from powerful Republican Richard Shelby, his nomination was scrapped and then resubmitted from the White House, and remains on hold in the upper chamber.
But Mr Diamond’s limbo is by no means the most troubling or most egregious. Jack Lew, the Obama administration’s pick for budget director, was cleared for the post in September by a Senate committee on a unanimous bipartisan vote. Read more
To say that Janet Yellen, Sarah Bloom Raskin and Peter Diamond got off lightly at their confirmation hearing before the Senate banking committee would be an understatement.
With most members distracted – or absent- by the imminent final vote in the Senate on financial regulatory reform, the event itself only lasted about 90 minutes. And if ever it was in doubt, it now seems abundantly clear that the three nominees will be comfortably, and swiftly, confirmed to the Federal Reserve board of governors.
Nevertheless, I was able to extract a few interesting nuggets from question-and-answer period. The most timely question came from Jeff Merkley of Oregon for Janet Yellen, who is slated to take over from Don Kohn as vice-chair. He asked where she stood on the dominant debate over US fiscal policy – should there be more stimulus or should authorities immediately start reining in the deficit ? Read more
Janet Yellen has just released her statement to the Senate banking committee, where she – along with Sarah Raskin and Peter Diamond, other nominees to the Federal Reserve board - faces a grilling from lawmakers today on her bid to become vice-chair of the Federal Reserve replacing Don Kohn.
Ms Yellen, president of the San Francisco Fed, is predictably cautious as she introduces herself to the panel: “I am wholeheartedly committed to pursuing the Fed’s congressionally mandated goals of maximum employment and price stability and to strengthening our programme of supervision and regulation, building on the lessons learned during the financial crisis.”
Her statement gets a little meatier later on, and, reading through the lines, there are two main messages. On monetary policy, Ms Yellen still believes plan A is an eventual tightening. And to Congress, Ms Yellen is very clear: independence is crucial to central banking, so hands off the Fed ! Read more
Don Kohn is set to end his tenure as vice-chairman of the Federal Reserve tomorrow, but, at the request of his boss Ben Bernanke, he will be staying on as governor until September 1 at the latest.
The hope within the central bank is that as early as next month the Senate will begin to move towards confirming Mr Kohn’s replacement, Janet Yellen, currently president of the Federal Reserve Bank of San Francisco.
Also on the Senate’s docket are the nominations of Peter Diamond, the Massachusetts Institute of Technology economist, and Sarah Bloom Raskin, the Maryland banking regulator, which would complete the seven-member board of governors.
Their nominations have stalled in Congress mainly for logistical reasons: Read more
You’ve got to hand it to President Barack Obama’s expected Fed picks – they have some strong consumer credentials.
Peter A Diamond co-wrote a book with Peter Orszag, now OMB director, on saving social security. The book, first published in 2004, suggests only minor reforms, and makes clear that social security needs saving as much from its reformers as from the deficit expected in 2042. Read more
The big news is that Janet Yellen is set to be tapped by President Barack Obama to replace Donald Kohn as the Fed’s second in command. But two other seats are still open, and it looks like Mr Obama may, after 14 months of silence on the open seats, be set to announce his nominations.
Sarah Raskin, the top banking regulator for the state of Maryland, and Peter Diamond, a Massachusetts Institute of Technology economist, are also under consideration for Fed board vacancies, the official said.
Sarah Bloom Raskin, official bio: Read more