A top U.S. Treasury official is expected to step down today amid reports she’s next in line for a spot on the Federal Reserve Board. Lael Brainard has been undersecretary for international affairs at the Treasury Department since 2010. The Board is facing not one, but three vacancies, setting up another round of lobbying by Wall Street.
When Fed Vice Chair Janet Yellen won out over economist Lawrence Summers as nominee to next lead the Federal Reserve, some thought Wall Street lost an ally.
“One of the reasons why he ran into some resistance on Capitol Hill is he had some very close relationships with financial market players,” says Cary Leahey with Decision Economics.
One thing Lael Brainard has going for her, Leahey says: she hasn’t spent much time on Wall Street.
“No matter how talented you are, if your zip code says New York City on it, your chances of being a Fed board member are extremely low,” he says.
Fed governors generally go along with the chair on monetary policy, says Mike Dueker, chief economist with Russell Investments. But governors will have a hand in implementing financial regulations as part of the sweeping Dodd-Frank reforms, he says.
“They want someone, certainly, who would have a relatively light touch in terms of regulatory powers,” Dueker says. “And they would want someone who would understand the impacts of actual written regulations on the banks themselves.”
And if that’s not in the cards this time, there will still be two more seats to fill.