President Barack Obama will be able to put his stamp on the Federal Reserve with appointments for perhaps as many as four seats on the central bank's board in coming months, even though he emphasized continuity in tapping Ben Bernanke for another term as chairman last month.

With the U.S. economy seemingly heading for a jobless recovery from recession, Obama may want to lean toward nominees who are likely to be patient before edging up borrowing costs before congressional elections in November.

He may also want a strong advocate of efforts to rein in financial excesses at a time the administration is pushing for tougher checks on Wall Street firms. The administration wants to expand the Fed's role by giving it the job of regulating firms whose collapse could imperil the entire economy.

Two vacancies already exist on the normally seven person Fed board, and some observers think two more could open up.

Donald Kohn's term as Fed vice chairman expires in June next year. The 66-year-old central bank veteran, whose separate term as a board member does not expire until 2016, has given no sign he plans to retire, but some observers expect he will.

Some analysts also expect Fed Governor Kevin Warsh, an alumnus of the Bush White House, may be ready to go with Democrats in power. He too has not signaled any intent to leave.

Obama has already named bank regulation expert Daniel Tarullo to the board. If he were to end up with four more quick picks, it would give him a highly unusual opportunity to shape the central bank so early in his term.

With financial overhaul, and if the Fed does have more power, then having your guys in there could be interesting, said Michael Feroli, an economist with JPMorgan Economics.


Even if Obama's choice of the Republican Bernanke meant passing over fellow Democrats such as White House aide Lawrence Summers or San Francisco Federal Reserve Bank President Janet Yellen, it was effective in calming financial markets worried about the economy's path to recovery.

Economists widely agree that central banks are most effective when politically independent, and any blatant sign of political pressure could translate into higher borrowing costs as markets bet on a higher tolerance for inflation.

With that goal in mind, the Fed board is designed to be insulated from politics with 14-year terms for governors and concurrent four-year terms for the chairman and vice chairman.

How much sway Obama might gain over monetary policy by naming four more board members is uncertain.

Indeed, how much influence he would want is not clear either. Recent administrations, both Democrat and Republican, have steered clear of anything that could be seen as pressuring the central bank and Obama appears headed down the same path by renaming Bernanke.

By tradition, the Fed is a collegial institution where the chairman holds great power and dissenters are rare. Officials generally check their ideologies at the door and consensus decisions, which carry greater heft, regularly carry the day.

When people get on the board, it's more or less like the Supreme Court, you realize that you're no longer an advocate ... for a political persuasion, but you're working for an institution that has a fierce streak of independence, said Gilbert Schwartz, a former Fed lawyer.


As a result, many observers expect one of Obama's picks to be a highly regarded economist in the mold of Frederic Mishkin, a Bush appointee who returned to teaching at Columbia University last year.

To make an imprint, the president is more likely to pick someone open to strengthening financial rules than someone who will turn a blind eye to inflationary pressures in promoting economic growth.

My money would be one of the next appointments ... would be a lawyer who is perceived as friendly to the consumer bar, said Mark Calabria, a former Republican Senate Banking Committee staffer.

Obama may also want a Fed governor adept at defending the central bank's role before a Congress that is both resentful over the Fed's bailouts of financial firms and angry the central bank failed to prevent the credit crisis.

Draft legislation from Representative Ron Paul, a perennial Fed critic, that would subject the central bank to a range of audits has gained surprising support and a version is expected to be included in an overhaul of financial regulations.

Bernanke has expressed concern Paul's proposal as currently written would open the door to examinations of Fed interest-rate decisions that would undermine the central bank's policy-making independence and potentially roil markets.

The Fed has defended its actions as needed to prevent a repeat of the Great Depression. But congressional ire threatens to derail Obama's push to give the central bank responsibility for ensuring the soundness of the financial system.