WASHINGTON — Kevin M. Warsh, who was the Fed’s chief liaison to Wall Street, will resign from the central bank’s board at the end of March, giving President Barack Obama yet another chance to leave his stamp on the Fed.
In an unusual move, Warsh, 40, had publicly expressed skepticism about the Fed’s $600 billion plan, begun in November, to buy bonds to lower long-term interest rates and stimulate bank lending.
He was the only one of the presidentially appointed Fed governors to voice such doubts, although he never voted against the plan. A former aide to President George W. Bush, he was the only governor with close ties to Republicans in Congress and to conservative organizations, like the Hoover Institution.
With his departure, the Fed board loses that link to conservatives at a time when conservative economists and some Republicans on Capitol Hill are critical of Federal Reserve Chairman Ben S. Bernanke and his policies.
The central bank looks to be increasingly dominated by so-called doves, who emphasize policies intended to create jobs and economic growth equally with fighting inflation, rather than those known as hawks, for whom stable prices and low inflation are paramount.
“It seems likely that anyone nominated by President Obama will be more ‚Äòdovish’ than Kevin Warsh right now,” on inflation, said Alan S. Blinder, a Princeton economist and former Fed vice chairman.
The Fed’s seven-member board already overwhelmingly bears Obama’s mark. The president named Bernanke to a second four-year term as chairman that began last year and has installed three other governors: Daniel K. Tarullo and Sarah Bloom Raskin, who specialize in bank regulation, and the economist Janet L. Yellen, the Fed’s vice chairwoman.
Another Obama nominee, the economist and Nobel laureate Peter A. Diamond, is awaiting Senate confirmation to the only current vacancy on the board.
Warsh, a former specialist in mergers and acquisitions at Morgan Stanley, helped manage the Fed’s response to the 2008 financial crisis, playing a crucial role in the decisions to broker the sale of Bear Stearns to JPMorgan Chase, to allow Lehman Brothers to go bankrupt and to bail out the American International Group. He joined the Fed board five years ago, after serving in the White House.
Mark W. Olson, a former Fed governor who overlapped with Warsh for several months in 2006, said Warsh’s departure would leave a gap.