The recent appointment of Austan Goolsbee as the Chicago Fed president, a prominent Democratic politician and Obama advisor, has been called into question after it was revealed that he received the job recommendation from a firm that employs his wife.
This has raised concerns not only about the objectivity of the selection process but also about Goolsbee's qualifications, effectively eliminating any chance he had of being considered for the recently vacated Fed vice chair position by Lael Brainard. The list of potential candidates has now shrunk to just a few names.
According to Bloomberg, as of this evening, the number of possible replacements for Brainard has dwindled down to just one, with Northwestern University Professor Janice Eberly emerging as the frontrunner in the White House search for the new Fed vice chair. Eberly, who served as chief economist at the Treasury Department under Barack Obama, has quickly become a candidate in the weeks since Brainard was selected as President Joe Biden's top economic aide.
As part of her vetting process, Eberly has met with Jeff Zients, Biden's chief of staff, as well as with Brainard and Treasury Secretary Janet Yellen, a former Fed chair.
A final decision has yet to be made, but the Biden administration is hoping to select a candidate who meets the mandatory Democratic identity policy list, including women, minorities, or LGBTQ individuals, with Eberly ticking at least one of those boxes. The administration has also been urged to appoint a Latinx candidate to replace Brainard, with 34 legislators signing a letter calling for this groundbreaking appointment.
However, for some progressives, this is not enough, and they are calling on the White House to appoint someone who is willing to make more efforts to defend the Fed's mission to support the labor market and is unlikely to push for further interest rate hikes, which could derail the economy. In other words, someone who is willing to raise the Fed's inflation target.
The Biden administration is aiming to fill a crucial vacancy soon with a candidate that fits the mandatory Democrat identity policy checklist, preferably a woman, a racial minority, or LGBTQ, according to sources. Northwestern University Professor Janice Eberly appears to check at least one of these boxes. Some progressive groups are urging the White House to choose someone who would do more to defend the Fed's mandate to support the labor market and raise the inflation target. The administration is looking for a candidate who believes in the Fed's dual mandate and the president's economic vision, said Bharat Ramamurti, deputy director of the White House National Economic Council.
If nominated, Eberly could face opposition from lawmakers who are advocating for more diversity among the Fed's upper ranks, which would test Biden's support in the Senate. The nominee must be confirmed by the US Senate, where Democrats hold a slim majority.
Harvard University Professor Karen Dynan is also a leading candidate for the position. Although Dynan held a key role in the Obama administration, succeeding Eberly as chief economist at the Treasury, Eberly is seen as the more dovish of the two. Bloomberg Chief US Economist Anna Wong wrote that Dynan would be one of the Fed's most hawkish voices, while Eberly could be closer to Brainard in her optimism that the Fed can get inflation back on track without causing a significant slowdown in the labor market. White House Press Secretary Karine Jean-Pierre said the administration will announce developments "in the near future."
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