* Panel clears way for Senate vote on Diamond
* Republicans again raise objections
* Outlook for confirmation by full Senate murky
(Adds details on Senate process)
By Emily Kaiser
WASHINGTON, Nov 16 A U.S. Senate committee
approved the nomination of Nobel laureate Peter Diamond to the
Federal Reserve Board on Tuesday over Republican objections,
sending it to the full Senate for a vote three months after it
The Senate Banking Committee voted 16 to 7 in favor of
Diamond, with all the "no" votes coming from Republicans.
Diamond, a professor at the Massachusetts Institute of
Technology who was awarded the Nobel prize in economics this
year, was backed by the same committee in July.
The full Senate never voted because a lawmaker used a
procedural obstacle to stall the confirmation in August.
Diamond was later renominated by President Barack Obama.
Republicans who have raised objections to Diamond say he
lacks the necessary experience to serve on the Fed board.
Senator Richard Shelby, the top-ranking Republican on the
committee, brought up a new concern on Tuesday: Diamond may not
be legally qualified.
Shelby cited a provision of law that requires that no two
Fed board members can hail from the same district. Both Diamond
and Fed Governor Daniel Tarullo listed Massachusetts as their
place of residence, Shelby said.
Senator Christopher Dodd, the Democrat who chairs the
committee, dismissed that objection and pointed out that the
Senate had previously approved several other nominees who did
not appear to meet the residency requirement.
Diamond's fate in the full Senate remained unclear. His
nomination could get stuck behind deliberations on the Bush-era
tax cuts and government spending legislation, both likely to be
If the Senate fails to vote on Diamond's appointment during
the brief "lame duck" session before newly elected lawmakers
officially join in January, Obama would have to renominate him
Senate Democratic Leader Harry Reid, without mentioning
Diamond by name, said he hoped to bring up a number of stalled
nominees for confirmation votes. A leadership aide said Reid
was in talks with Republicans, but that there has been no word
of any agreement on the Diamond nomination.
A Republican aide said unless the nomination obtains
unanticipated unanimous Senate support, allowing it to come to
the floor quickly, it was unlikely the Senate would act.
Diamond, who won the Nobel for his research on labor
markets, is known as a proponent of behavioral economics, which
studies why people do not always make rational economic
Shelby said Diamond was "certainly a skilled economist" but
that professional accolades were just one category to consider
in determining whether a nominee was qualified to serve on the
seven-person Fed board -- the nucleus of U.S monetary
Although the central bank was designed to be insulated from
politics, the Fed has found itself caught up in several
congressional skirmishes since the financial crisis exploded in
2007. Its emergency measures to prevent the collapse of the
financial system sparked criticism that it was overstepping its
Republicans have ramped up their criticism of the Fed in
the past year, tapping into voter angst over bailouts. The Fed
was closely involved with the forced sale of Bear Stearns and
the costly rescue of insurer AIG in 2008.
One Republican lawmaker said on Tuesday he was introducing
legislation that would strip the Fed of its "dual mandate" to
promote price stability and full employment. [ID:nN16133970]
(Additional reporting by Tom Ferraro; Editing by Leslie Adler
and Dan Grebler)