Trump Fed Pick Withdraws Amid Republican Criticism
One of President Trump’s nominees to fill two vacant seats on the Federal Reserve Board of Governors has withdrawn herself from consideration, following criticism from Republicans that she may stifle the loosening banking regulations under the current administration.
Nellie Liang — a former Federal Reserve Director who is currently a fellow at the Brookings Institute — was nominated to a seat on the Federal Reserve Board by President Trump in September. Liang was the first director of the Federal Reserve’s Division of Financial Stability, created in 2010 following the 2008 financial crisis. She helped craft the post-crisis banking regulations passed during the Obama administration, and helped develop the Federal Reserve’s plan for identifying and mitigating destabilizing risks to the financial sector.
Since the election of President Trump in 2016, the president, his appointees, and Republican lawmakers have been slowly dismantling the Obama-era regulations, according to the Hill. Last May, a bipartisan bill to loosen the 2010 Dodd-Frank Wall Street Reform law was passed. Meanwhile, President Trump has placed advocates for loosening Dodd-Frank in top positions in the Federal Reserve, Office of the Comptroller of the Currency, Securities and Exchange Commission, the Consumer Financial Protection Bureau, and the Federal Deposit Insurance Corporation.
This fall, the Federal Reserve has pushed a number of proposals that include loosening Dodd-Frank regulations on banks with less than $700 billion in assets, and limiting the number of stress tests required by the Federal Reserve. Additional proposals have called for loosening liquidity rules, and exempting many large banks from capital rules meant to safeguard smaller banks that have heavy exposure from other large international firms. Republican lawmakers were concerned that Liang would stifle this deregulation of the financial sector, and have publicly griped about Liang’s nomination. They have apparently also complained about Liang’s nomination in private to the current administration.
Liang withdraws nomination for Fed board seat https://t.co/YrFHdxuKjY pic.twitter.com/1KIZ11Ufh3
— Reuters (@Reuters) January 8, 2019
Amidst the opposition from Republican lawmakers — and uncertain of the confirmation of her nomination — Liang withdrew her candidacy today, saying that “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.”
“I have great respect for the Federal Reserve and its current leadership, and look forward to contributing as an outside researcher to the vital economic policy issues they face,” she said.
“We supported her nomination and believe she would have made a good Governor,” White House spokeswoman Lindsay Walters said in a statement, according to CNBC.
“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.”
Despite support from the president, Liang’s withdrawal may give him the opportunity to nominate someone who will oppose Federal Reserve Chairman Jerome Powell in continued interest rate increases by the Federal Reserve, according to Yahoo! Finance. President Trump has publicly attacked Powell’s policies, and has even investigated the possibility of firing the chairman.
President Trump’s second nomination for one of the two open seats, Marvin Goodfriend, also appears to have his confirmation in doubt. Goodfriend, a Carnegie-Mellon professor, has also met opposition from Republican lawmakers for his controversial monetary policy proposals. His nomination was not confirmed in the Senate — and with the change in Congress after the new year, he will have to be re-nominated by President Trump.
“In the new Senate, Goodfriend could now have enough votes to win confirmation,” Capital Alpha analyst Ian Katz wrote, “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.”
