WASHINGTON, March 12 San Francisco Federal
Reserve Bank President Janet Yellen is a leading contender to
be nominated by President Barack Obama as vice chair of the
U.S. central bank, a senior administration official said on
Sarah Raskin, the top banking regulator for the state of
Maryland, and Peter Diamond, a Massachusetts Institute of
Technology economist, are also under consideration for Fed
board vacancies, the official said.
The following is a brief outline of their backgrounds:
Currently president of the Federal Reserve Bank of San
Francisco, Yellen is a top-flight economist with a long history
of public service, working for President Bill Clinton as
chairwoman of the White House Council of Economic Advisers
between 1997 and 1999, and as a governor of the Federal Reserve
Board in Washington between 1994 and 1997.
Yellen, who is widely respected within the Fed system,
academia and by financial markets, is seen as being on the
dovish wing of Fed policy-makers in terms of how she views the
risks of inflation compared with unemployment.
The Fed's mandate is to hold prices low and stable, while
ensuring the highest level of sustainable U.S. employment.
There is ample scope to come to different judgments about the
best interest rate stance to reach this objective.
Hawks tend to view higher interest rates, slower growth and
lower levels of employment as a price worth paying for keeping
inflation at bay. Doves take a more lenient view of inflation
if it means stronger employment growth, or are less liable to
generate alarming forecasts for inflation as they estimate
future growth and price-pressures.
Raskin is currently commissioner of financial regulation
for the state of Maryland. She would bring important skills and
experience to the U.S. central bank as the Obama administration
seeks to strengthen consumer protection against the sort of
financial products blamed for the U.S. subprime mortgage
crisis, which tipped the economy into a severe recession when
the housing market collapsed.
She is known as an expert on consumer and regulatory
issues. She had held positions as chair of the Regulatory
Restructuring Task Force, a group of state banking
commissioners who are developing principles for evaluating
regulatory restructuring proposals, and chair of the Consumer
Financial Products Agency Task Force.
She was also previously managing director at Promontory
Financial Group and banking counsel at the U.S. Senate Banking
Committee, and worked at the New York Federal Reserve Bank and
the congressional Joint Economic Committee.
In testimony before the panel overseeing the government's
bank bailout last year, Raskin called for stronger consumer
focus from regulators and backed breaking up banks that have
become too large.
"The current crisis is the result of well over a decade's
worth of policies that promoted consolidation, uniformity,
preemption and the needs of the global marketplace over those
of the individual consumer," she said in January 2009.
An economics professor at the Massachusetts of Technology,
Diamond has written extensively on taxation and pension reform.
He would add a consumer-focused voice to the Fed at a time
lawmakers are debating whether to strip the central bank of its
consumer protection role. His 2004 book, "Saving Social
Security," was co-authored with Peter Orszag, now director of
Obama's Office of Management and Budget.
Diamond, a former president of the American Economic
Association, is known as a proponent of behavioral economics,
which studies why people do not always make rational
He has frequently consulted on panels examining the future
of Social Security, the government-backed pension system.
(Reporting by Alister Bull and Mark Felsenthal; Editing by