President Barack Obama announced his nomination of Jeremy C. Stein PhD ’86 and Jerome H. “Jay” Powell to the Federal Reserve Board of Governors last December.
In a statement made on Dec. 27, 2011, Obama said that he was grateful that his nominees agreed to serve their nation. “Their distinguished backgrounds and experience coupled with their impressive knowledge of economic and monetary policy make them tremendously qualified to serve in these important roles,” Obama said.
After graduating from Princeton, Stein received a PhD in economics from MIT in 1986. He is currently the Moise Y. Safra Professor of Economics at Harvard and previously taught finance at MIT Sloan for 10 years.
Stein’s research has covered topics as the behavior of stock prices, corporate investment and financing decisions, risk management, capital allocation inside firms, banking, financial regulation, and monetary policy.
In 2009, Stein served in the Obama administration as a senior advisor to the treasury secretary and as a staff member of the National Economic Council.
On Jan. 24, 2012, Stein’s nomination was sent to the Senate. Stein would serve the unexpired term of 14 years from Feb. 1, 2004 that vice Kevin M. Warsh resigned from.
Warsh resigned from the Board of Governors in 2011. He was a former aide to President George W. Bush and according to the New York Times, he was the only governor with close ties to Republicans in Congress and to conservative organizations such as the Hoover Institution, a public policy think tank. Warsh was known for being a “hawk” who emphasized stable prices and low inflation.
According to Bloomberg, the other nominee, Powell, who also has Republican ties, gained most of his experience outside of government. He was a partner at the Carlyle Group, a Washington-based manager of private equity funds and was an investment banker with Dillon Read and Co.
Roberto Perli, a former economist in the Fed’s Division of Monetary Affairs, told Bloomberg that the Democratic-Republican pairing of Stein and Powell, respectively, may help their chances of winning Senate approval.
Last year, MIT professor and Nobel laureate Peter A. Diamond PhD ’63 withdrew his nomination to the Federal Reserve Board after 14 months of Republican opposition in the Senate. Richard C. Shelby, the Alabama senator who led the deadlock, claimed Diamond lacked background and experience in monetary policy. Diamond received the 2010 Nobel Prize in Economics for his work on markets where buyers and sellers have difficulty finding each other.