Obama to renominate Diamond to Fed: official

By @ibtimes on

President Barack Obama will again nominate economist Peter Diamond to the Federal Reserve Board next year, a White House official said on Thursday, setting up a potential clash with Republicans who will have more influence in the new Senate.

The Senate scuttled Diamond's nomination on Wednesday by failing to vote on it before adjourning a lame-duck legislative session for the year.

The Obama administration views Diamond, a Nobel prize-winning economist at the Massachusetts Institute of Technology, as extremely well qualified for the job and believes Republicans will see this too if they stick with him.

Asked about the renomination decision, a White House official pointed to the president's remarks on Diamond in October when he was a joint winner of the 2010 Nobel prize in economics with Dale Mortensen for their work on labor markets.

Obama said then that their research has applications in a wide range of areas, like unemployment and housing, where we need our best and brightest minds, and added:

I have nominated Peter to the Board of Governors of the Federal Reserve to help bring his extraordinary expertise to our economic recovery.

Republican Senator Richard Shelby, who will be back when the Senate reconvenes on January 5, had placed a so-called hold against confirmation of Diamond.

Shelby applied the same tactic to delay confirmation of Obama's choice to head the regulatory body that oversees Fannie Mae and Freddie Mac, Joseph Smith, the North Carolina commissioner of banks. Smith's nomination also was killed by Senate inaction.

The only way Obama's Democrats in the Senate could have gotten around the holds was to muster 60 votes in the 100-member Senate, but they were unable to do so.

Their prospects for getting 60 votes don't seem likely to get better next year since there will be five more Republican seats, cutting Democrats' majority to 53-47.

But such holds on nominees are often withdrawn once Senators' concerns are addressed.

A spokesman for Shelby could not immediately be reached for comment.

Diamond has strong expertise on budget and tax issues, but this research focus prompted criticism from some Republicans who argued he lacked the proper experience on monetary policy. He has been unusually vocal on a wide range of topics for a nominee who was still awaiting Senate confirmation.

Diamond expressed his opposition to extending Bush-era tax cuts for the wealthy in an interview with Reuters last month, saying it would not be good policy.

Despite such criticism, echoed by many Democrats, the tax cuts were passed as part of a deal between the White House and Republicans that will also extend emergency unemployment benefits and reduce payroll taxes.

FHFA NOMINATION IN LIMBO

White House officials provided no details on whether they will try to revive Smith's nomination to head the Federal Housing Finance Agency. Smith faced Republican opposition, with Senator Shelby calling him a tool of the administration.

Smith promised Shelby at his confirmation hearing that he would be an independent regulator. But Fannie Mae and Freddie Mac remain controlled by the Treasury Department, which pledged a year ago to fund unlimited losses. Many Republicans have voiced opposition to proposals to use the two finance entities to subsidize the housing market.

(Additional reporting by Thomas Ferraro, Corbett B. Daly and Kristin Roberts in Washington and Alister Bull in Hawaii; Editing by Neil Stempleman and Chizu Nomiyama)

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