Bernanke Ally on Fed Board Resigns
Bloomberg reports:
Federal Reserve Governor Kevin Warsh, who was one of Chairman Ben S. Bernanke’s closest financial-crisis advisers before becoming the only governor to question the expansion of record monetary stimulus in November, resigned after five years at the central bank.
Warsh, 40, a former investment banker who was the youngest- ever Fed governor when then-President George W. Bush appointed him in 2006, will leave “on or around March 31,” he said in a letter today to President Barack Obama that was released by the Fed in Washington. His term would have run through January 2018.
His departure may give Bernanke a stronger hand to complete or potentially expand $600 billion in Treasury purchases through June. At the same time, Bernanke loses a link to Wall Street executives and Republican politicians as he carries out Congress’s overhaul of financial regulation and faces criticism from a political party that in the midterm election gained control of the U.S. House.
“I am honored to have served at a time of great consequence,” Warsh said in his resignation letter. Bernanke said in a statement that Warsh’s “intimate knowledge of financial markets and institutions proved invaluable during the recent crisis.”
Warsh’s resignation opens a second vacancy on the seven- member Board of Governors and leaves Elizabeth Duke, a former community banker, as the only governor not appointed or reappointed by Obama. Duke’s term expires in January 2012, and she can stay after that until a replacement is appointed. Obama’s nomination of Peter Diamond, a Nobel Prize-winning economist from the Massachusetts Institute of Technology, is pending in the Senate again after failing last year.
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