The Fed announced that Frederic Mishkin will be leaving the central bank effective August 31. The governor’s term extended through 2014, but he chose to leave early to return to the Columbia faculty, where he teaches at the business school.
Personally, I think this is a good thing. Mishkin was on the FOMC and a vocal proponent of rate cuts (I’m in complete agreement with Richard Alford that the Fed is looking at the situation incorrectly and pushing the gas pedal too hard). My sense was, both due to his friendship with Bernanke and his forceful style, that his influence was far greater than his single vote.
The departure may create an unprecedented third vacancy on the seven-member Fed Board of Governors this year as the central bank tries to ease the credit crisis. The vacancies mean that a new U.S. president to be inaugurated in January may have an opportunity to influence monetary and regulatory policy by nominating new members to the board.
“He was a pretty important supporter of the move toward aggressive rate-cutting this year,” said Michael Feroli, an economist at JPMorgan Chase & Co. in New York, who used to work at the Fed.
Senate Banking Committee Chairman Christopher Dodd, a Democrat from Connecticut, has already delayed a confirmation vote for three board nominees for more than a year. After gaining support from the committee, the nominations would go to the full Senate for a vote of final approval…..
Bush asked the Senate last May to confirm to the board Elizabeth Duke, chief operating officer of Virginia-based TowneBank, Larry Klane, former president of global financial services at Capital One Financial Corp. and Randall Kroszner, a Fed governor whose term expired on Jan. 31. Kroszner has continued to serve while awaiting confirmation….
Investors and economists view Mishkin’s speeches as a barometer for Chairman Ben S. Bernanke’s opinions and the direction of Fed policy. Two talks by Mishkin in September, for example, proved to be among the best predictors of the Fed’s surprise half-point rate cut that month.