Fully Fed

Obama strikes right equilibrium with new Fed board

US President Barack Obama has struck the right balance with the new Federal Reserve board. He formally tapped Stanley Fischer and Lael Brainard to become governors. They bring indisputable crisis experience, global perspective and more gender balance to the central bank. And renewing Jerome Powell's term makes the package more palatable for Republicans. That will leave one vacancy, ideally for a regulator type.

Fischer will become the board's vice-chair, replacing Janet Yellen who will soon take the top spot. A godfather of modern economics, his unparalleled background provides academic expertise, real-world financial fire-fighting and international connections. He can provide insights on monetary policy and stability shocks, along with bolstering global credibility.
 
Brainard will further boost the Fed's profile among foreign peers. Her four years of diplomacy at the Treasury will translate well to the central bank's role as the world's most influential. She also replaces one of the two departing female governors. If she is confirmed, two of the board's seven seats will be filled by women.

Although Powell only joined the Fed in mid-2012, his term expires this month. Keeping him on may go some way to pacifying Senate Republicans who voted against Yellen's ascendance, though they can no longer derail the confirmation process. Late last year, the Democratic leadership changed the rules to prevent filibuster. Unless Democrats have a problem with Fischer or Brainard, the president's picks should all be approved easily.

If the process is speedy, the board may be fully staffed for a short time. Once Chairman Ben Bernanke departs, another slot opens. Although that nominee is not yet known, Obama would be wise to find a replacement with the teeth of a watchdog. Daniel Tarullo provides a strong foundation on the topic. But someone more attentive to smaller banks would complement his focus on systemic risk perfectly. Sarah Bloom Raskin served that purpose before leaving to become second-in-command at the Treasury.

With another regulator-type, the central bank's leadership would be ideally equipped to carry out its duties. Considering the expansive arc of its responsibilities - from fulfilling its dual mandate of price stability and full employment to responding to global and domestic economic emergencies to overseeing banks - that's saying something.