Senate helps Bush put finishing touch on Fed

By Tim Ahmann

WASHINGTON (Reuters) – The U.S. Senate on Friday approved
the nominations of University of Chicago economist Randall
Kroszner and White House aide Kevin Warsh to be members of the
Federal Reserve Board.

The Senate confirmed the nominees without debate.

Kroszner, who specializes in international finance and
financial regulatory issues, served as a member of Bush’s
Council of Economic Advisers from November 2001 to July 2003.

Warsh, a former investment banker, is executive secretary
on the White House National Economic Council.

With the Senate vote, President George W. Bush has now put
a firm stamp on U.S. central bank, having appointed all seven
members of the Fed’s Washington-based board — the first
president to do so since Ronald Reagan in 1988.

Fed Vice Chairman Roger Ferguson, the only Democrat, was
initially appointed by President Bill Clinton. Board member
Donald Kohn is a political independent.

The board lies at the heart of U.S. monetary policy-making
and as such wields great influence over the direction of the
world’s largest economy.

New Fed Chairman Ben Bernanke, who took office on February
1, had served as chairman of Bush’s Council of Economic
Advisers since last June. The former Princeton University
professor, a widely respected monetary scholar, had been on the
Fed’s board for nearly three years prior to that.

FRESH FACES

Warsh, 35, has worked on the NEC — a White House body that
coordinates economic policy across agencies — since 2002.

At the White House, he has focused on regulatory and
financial market matters, including oversight of mortgage
market giants Fannie Mae and Freddie Mac and accounting and
corporate governance reforms.

Before coming to Washington, Warsh worked at Morgan
Stanley’s mergers & acquisitions department for more than six
years, most recently as executive director.

Warsh, who has a bachelor’s degree from Stanford University
and a law degree from Harvard, will become the youngest board
member in the Fed’s 92-year history.

Kroszner, 43, has been a research consultant for the
Federal Reserve Bank of Chicago since 1994 and a visiting
scholar at the Fed board. He has a bachelor’s degree from Brown
University and a master’s and a doctorate from Harvard.

Colleagues say his views fit with the generally
conservative “Chicago school” of economics.

Both Warsh and Kroszner were tapped to fill unexpired
terms. Kroszner’s would expire January 31, 2008, while Warsh’s
would run until January 31, 2018.

During a Senate hearing on Tuesday, both nominees pledged
to maintain the central bank’s independence and keep faith with
its mandate from Congress to pursue both price stability and
full employment.