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Names of possible replacements for Lael Brainard at the Federal Reserve have begun to circulate around Washington, and President Joe Biden is facing some pressure to choose a Latino candidate as the central bank’s new vice chair.
Brainard has taken a post as head of the White House’s National Economic Council, creating a vacancy on the Fed’s seven-member board of governors. Brainard was also the Fed’s vice chair, serving as No. 2 to Fed Chair Jerome Powell.
There are about half a dozen names in the mix to succeed her.
Read: What Brainard gains — and what Powell loses — from her move to the White House
Evercore ISI analyst Tobin Marcus — a former Biden adviser — said a short list is emerging, led by Karen Dynan, a former Treasury official and Fed staffer, and Janice Eberly, another former Treasury official.
Seth Carpenter, a chief economist at Morgan Stanley
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is another name, Marcus said, but he is seen as less likely to be the nominee. Reports have also named former Barack Obama adviser and current Chicago Fed President Austan Goolsbee, Fed Governor Lisa Cook and former top Fed staffer Brian Sack as possible candidates.
Sack is the onetime head of the New York Fed’s Markets Group and recently left his position at D.E. Shaw & Co., Bloomberg reported.
“We believe Dynan and Eberly are the most likely. We would view either as a continuity pick, replacing Brainard with another respected economist who is well-known in Democratic policymaking circles,” Marcus wrote in a note to clients.
The White House did not return a request for comment about the vacancy.
Complicating the picture, lawmakers including Sen. Bob Menendez, a New Jersey Democrat who is a senior member of the Senate Banking Committee, are pressing Biden to name a Latino candidate to replace Brainard. The banking committee has jurisdiction over Fed nominees.
“As you consider nominees to fill the vacancy on the Federal Reserve Board of Governors, we strongly urge the Administration to nominate a qualified Latino candidate to fill this position,” a group of 34 Latino members of Congress wrote to Biden on Feb. 17.
Kaleb Nygaard, an economics researcher at the University of Pennsylvania, said he thinks the White House is taking Menendez’s call seriously.
“It seems like Menendez is building momentum,” he said.
Biden has some wiggle room. He could fill Brainard’s seat on the Fed’s board of governors and then name a sitting Fed governor or a reserve bank president as the Fed’s vice chair. That post has traditionally gone to an expert on monetary policy.
Nygaard said that there is also a chance of another vacancy on the Fed board.
Fed Governor Michelle Bowman, the first person to fill a seat reserved for the community-banking sector, has recently been linked in reports to the top job at the Kansas City Fed, which is vacant. Bowman was appointed to the Fed by President Donald Trump in late 2018. Her family was part of a group that chartered a state bank called Farmers and Drovers Bank in Council Grove, Kansas.
Karen Petrou of Federal Financial Analytics said she didn’t think Menendez would hold up a Biden Fed nominee in the banking committee even if there were no Latino candidates on the list.
Petrou said it’s hard to tell if the Fed vacancy is on a fast track. Historically, appointments to the Fed and other financial regulatory agencies haven’t been a priority, she noted.
Ben Koltun, director of research at Beacon Policy Advisors, said that when it comes to replacing Brainard, it’s not just her monetary views that are important, but also her institutional know-how. She led four of the eight board committees, which gave her oversight of the Fed’s research staff and of the analysis of a potential central bank digital currency, among other things, he noted.
“To that end, some of the names being circulated have experience in the Fed and/or Treasury,” he said.
