A Silicon Valley Bank logo is seen in Tempe, Arizona, on March 14, 2023. (Photo by REBECCA NOBLE / AFP)
President Joe Biden’s hunt for a Federal Reserve vice chair is down to a handful of candidates and the administration has the banking crisis and collapse of Silicon Valley Bank firmly in mind as it narrows its search, according to people familiar with the deliberations.
The White House wants a candidate with experience in both monetary and regulatory policy following the failure of two regional banks, SVB and Signature Bank, that raised fears of contagion and a broader financial crisis, the people said.
A decision is expected in the coming weeks and a small number of potential nominees are in the running, the people said, speaking on condition of anonymity as discussions continue.
Northwestern University Professor Janice Eberly has been seen as a frontrunner for the pick, and is considered a more dovish candidate. Eberly remains under consideration, but it is not clear who the other finalists are.
Biden is looking to fill the opening at the central bank created by former Vice Chair Lael Brainard’s move to the White House last month to head the National Economic Council.
The president is juggling pressures from his own party as he weighs a replacement. Progressives, including Massachusetts Senator Elizabeth Warren, have urged him to nominate someone as a counterweight to Fed Chair Jerome Powell and his interest rate hikes and as a voice for tougher banking regulations.
Biden also faces calls from some lawmakers such as Senator Robert Menendez to nominate a Latino candidate. The White House has said a diverse pool of candidates is being considered for the post.
The pick, if confirmed by the Senate, would join the Fed as it grapples with when to pause its interest rate increases, torn between concerns about taming inflation and exacerbating instabilities in the banking system.
The Fed has also launched an investigation into the events that led to the collapse of SVB. Congress is likely to open its own inquiries.
The White House on Thursday proposed a slate of tougher rules and more frequent stress tests for mid-sized banks that bear Brainard’s fingerprints. As vice chair, she frequently warned that financial deregulation legislation passed in 2018 went too far, including for banks with deposits between $100 billion and $250 billion - a category that SVB fell into.
Senate Banking Committee Chair Sherrod Brown said last week, after SVB collapsed, that he was "not convinced anybody” is the frontrunner, and added that the absence of Senator John Fetterman was a factor in any nominee advancing through the committee. Fetterman, a Pennsylvania Democrat, is due to return after the Easter recess.
Other people who’ve been said to be candidates have seen their circumstances change.
Harvard University professor Karen Dynan and Morgan Stanley Chief Global Economist Seth Carpenter have each been giving public remarks since the search began, typically a signal that they’re not under a blackout period that accompanies late-stage vetting. San Francisco Fed President Mary Daly, meanwhile, is in the center of the storm over whether regulators missed warning signs at SVB - a dynamic that would substantially complicate her candidacy.
