Economist's Commentary: June 30, 2008
New Governor at the Federal Reserve
By Danielle Hale, Research Economist
Friday afternoon, before leaving for Independence Day recess, the Senate confirmed a handful of Bush nominees, including Elizabeth A. Duke to a seat on the Board of Governors of the Federal Reserve. As I wrote only days ago, any move to fill vacant seats seemed unlikely despite the fact that this impasse would have led to a shift of power-unprecedented since the reorganization of the system in 1935-to the regional bank Presidents on the Federal Open Market Committee. However, in a somewhat low key victory of public interest over politics, Ms. Duke's appointment was confirmed without dissent. The other two Bush nominees for seats on the Board of Governors remain unconfirmed. Senator Reid stated, "We are ensuring the Fed can function during these difficult economic times."
Ms. Duke is a banker by trade serving in executive roles at TowneBank and Wachovia and as Chairman of the American Bankers Association in 2004 - 2005. She will be the only female currently serving on the Board, and she will be one of only two current Governors without a PhD in economics.
Ms. Duke's history in the banking industry would suggest that she will bring a very different and valuable perspective to the Board and FOMC as they tackle regulatory issues and other challenges arising from the March intervention in the Bear Stearns deal. As a member of the Washington-based Board without a strong academic background in economics, it is unlikely that she will exert noticeable influence on the FOMC's monetary policy decisions. Practitioners (in contrast to academics) generally tend to focus more on short-term events and follow the lead of the chairman. This appointment, to a term which concludes in January 2012, brings the number of Governors on the Board to six, helping Bernanke shore up his leadership of the FOMC.
Ms. Duke holds a Master of Business Administration degree from Old Dominion University in Norfolk, Virginia, and majored in drama at the University of North Carolina at Chapel Hill. The first Board of Governors meeting during her tenure is scheduled for July 7. The next FOMC meeting is scheduled for August 5.
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