Obama to renominate Peter Diamond to Fed, official says

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 White House official offered no further details on the plan to renominate Diamond, a Nobel prize-winning professor at the Massachusetts Institute of Technology.

There was also no word on whether the Obama administration would renominate North Carolina bank commissioner Joseph Smith to head the agency that oversees housing finance companies Fannie Mae and Freddie Mac. Smith's nomination also died without Senate action.

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.

The only way Obama's Democrats in the Senate could have gotten around the hold 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.

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

Senate Majority Leader Harry Reid's office referred questions about the strategy behind renominating Diamond to the White House.

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. [ID:nN30275751]

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

Smith, Obama's choice to head the Federal Housing Finance Agency, faced stiff 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 Daly and Kristin Roberts; Editing by Neil Stempleman)

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