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Obama to nominate Stanley Fischer, two others to Fed seats

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WASHINGTON — President Obama will nominate Stanley Fischer, the former head of the Bank of Israel, to be vice chair of the Federal Reserve, and also tapped two others for seats on the central bank's Board of Governors, the White House said.

Lael Brainard, who stepped down in November as Treasury undersecretary for international affairs, was chosen to fill one of the vacant seats on the seven-member Fed board.

Jerome H. Powell, a former Treasury official and investment banker who has served on the Fed board since 2012, will be renominated. Powell was confirmed to fill out a term that expires Jan. 31.

"These three distinguished individuals have the proven experience, judgment and deep knowledge of the financial system to serve at the Federal Reserve during this important time for our economy," Obama said Friday.

The nominations, which had been expected, add to the major changes coming at the Fed as it tries to pull back on its aggressive efforts to stimulate the economic recovery without damaging it.

Fed Vice Chair Janet L. Yellen, confirmed this week to replace Chairman Ben S. Bernanke after his second four-year term expires Jan. 31, will lead a different and potentially more fractious Fed policymaking team.

This month, four new regional Federal Reserve Bank presidents rotate into the 12 voting positions on the Federal Open Market Committee, which sets monetary policy. All seven Fed governors are voting members.

Friday's Labor Department report showing that employers created a disappointing 74,000 net new jobs in December highlighted the difficulties for Fed policymakers. They must decide if the economy is strong enough to continue reducing the Fed's bond-buying stimulus program, a policy that started last month. Most other data point to an improving labor market.

Fischer, 70, who was governor of Israel's central bank from 2005 to 2013, is an economist who brings a wealth of experience to the Fed's No. 2 position. Some analysts worry that he could overshadow Yellen.

He has worked at the World Bank and the International Monetary Fund, and he was vice chairman of banking behemoth Citigroup Inc. from 2002 to 2005.

Fischer was Bernanke's doctorate advisor at the Massachusetts Institute of Technology and taught both Lawrence H. Summers, a former Treasury secretary, and Mario Draghi, the European Central Bank's president.

Obama said Fischer was "widely acknowledged as one of the world's leading and most experienced economic policy minds" and that he and Yellen would "make a great team."

Alex Cukierman, an economics professor at Tel Aviv University, agreed.

"I admire the breadth of his knowledge and experience, his intuition, the patience he has for exploring numerous points of views before reaching a decision and, last but not least, invariably good humor," Cukierman said.

Brainard also brings international experience and helps close a pending gender issue on the central bank's board.

Elizabeth Duke stepped down last year and Sarah Bloom Raskin is awaiting confirmation as deputy Treasury secretary. When Raskin departs, Yellen would be the only woman on the board.

Powell served as an assistant secretary and undersecretary at the Treasury Department under President George H.W. Bush.

jim.puzzanghera@latimes.com

Times staff writer Don Lee contributed to this report.

Copyright © 2014, Los Angeles Times
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