Obama picks University of Michigan economist Dominguez for Fed post

[July 21, 2015]  By Jeff Mason
 
 WASHINGTON (Reuters) - President Barack Obama has chosen University of Michigan economist Kathryn Dominguez to fill the final open seat on the Federal Reserve Board of Governors, adding an expert in international economics to the central bank's leadership team.

Dominguez, who is also a research associate at the National Bureau of Economic Research, has a background in foreign exchange rates, emerging markets, and international borrowing, the White House said.

"Dr. Dominguez has the proven experience, judgment, and deep knowledge of the financial system, monetary policy, and international capital markets to serve at the Federal Reserve during this important time for our economy," Obama said in a statement.

In January Obama nominated former community banker Allan Landon to the Fed's board in response to calls for a greater voice for Main Street in the central bank's deliberations.

His nomination has languished in the Republican-controlled Senate, and sources said in April Banking Committee Chairman Richard Shelby did not plan to schedule a hearing until Obamapicked someone to fill the Fed's last open seat.
 

The addition of Dominguez and Landon would bring the Fed Board of Governors up to its full strength of seven just as Fed Chair Janet Yellen is expected to begin lifting short-term interest rates for the first time since 2006.

Dominguez has served as a research consultant at the World Bank, International Monetary Fund and Bank for International Settlements.

Her expertise would be "a vital asset to the Federal Reserve as it considers how international financial conditions interact with U.S. monetary policy and U.S. banking regulations," a White House official said.

Princeton University economist Alan Blinder, a former vice chairman of the Fed's Board of Governors, said Dominguez was a "top-notch" economist who was committed to "getting it right."

Independent Community Bankers of America President Camden Fine said he hoped Senator Shelby would hold hearings in September and "move these nominations along."

The Fed last had seven governors in August 2013.

Dominguez’s published papers offer few hints about her policy leanings.

Writing in 2012, she sketched out scenarios for the future of the euro. “The biggest challenges are political,” she wrote.

In a paper from 2013, Dominguez made the case that much of the surprising slowness of the U.S. recovery from the financial crisis stemmed in large part from shocks originating in Europe.

Crises overseas exacerbated domestic concerns such as the debt ceiling crisis and dragged on U.S. growth, she wrote.

(additional reporting by Ann Saphir and Roberta Rampton; Editing by Christian Plumb)

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