Senate Banking Panel Advances Fed, Two Other Financial Nominees

Economics professor Marvin Goodfriend endorsed for Federal Reserve Board

The Senate Banking Committee has narrowly endorsed the nomination of Marvin Goodfriend to the Federal Reserve Board of Governors. (Tom Williams/CQ Roll Call file photo)
The Senate Banking Committee has narrowly endorsed the nomination of Marvin Goodfriend to the Federal Reserve Board of Governors. (Tom Williams/CQ Roll Call file photo)
Posted February 9, 2018 at 5:04am

The Senate Banking Committee narrowly endorsed Thursday the nomination of Marvin Goodfriend to the Federal Reserve Board as Democrats complained that the economics professor is more focused on fighting inflation than creating jobs.

Goodfriend faced opposition from Democrats because of what they described as a lack of commitment to the Fed’s goal of supporting maximum employment. His nomination advanced on a party-line vote of 13-12.

Senate Banking Chairman Michael D. Crapo predicted Goodfriend would win Senate approval.

“I’m not aware of any Republican opposition,” Crapo, R-Idaho, told reporters.

The committee also advanced by voice vote the nomination of Jelena McWilliams to become head of the Federal Deposit Insurance Corporation, a regulator that managed the failures of more than 500 banks since the financial crisis. Sen. Elizabeth Warren, D-Mass., asked to be recorded as a “No” vote.

The committee also backed by voice vote Thomas E. Workman, a nominee for a seat on the Financial Stability Oversight Council, the body charged with identifying risks to the financial system. While the other nine members of the council, created by the 2010 Dodd-Frank financial overhaul  are regulators, Workman would occupy the independent seat that must be filled by someone with insurance expertise.

The committee also approved the addition of two new members, Sens. Jerry Moran, R-Kan., and Doug Jones, D-Ala., to three subcommittees: Securities, Insurance and Investment; Housing, Transportation and Community Development; and Economic Policy.

Crapo praised Goodfriend, McWilliams and Workman. “Their judgment and expertise will be an asset,” he said.

But ranking member Sherrod Brown of Ohio complained that Goodfriend has for too long favored the inflation-fighting side of the Federal Reserve’s dual mandate of maximizing employment and maintaining stable prices. The Fed’s inflation target is 2 percent. Brown said he couldn’t endorse Goodfriend because of “a decade-long record of prioritizing hypothetical inflation” over jobs.

During Goodfriend’s confirmation hearing last month, Democrats blasted him for a variety of reasons, particularly his hawkishness on fighting inflation.

The Carnegie Mellon University economics professor’s commitment to the employment portion of the Fed’s dual mandate was the focus of most of the criticism.

Goodfriend admitted when questioned by Warren that he’d been wrong for suggesting interest rates should be raised to combat inflation caused by an improving job market as early as 2011, when the unemployment rate was still more than 8 percent. While the unemployment rate has since dropped to 4.1 percent, inflation has remained under 2 percent.

Goodfriend told Sen. Robert Menendez, D-N.J., that he “totally” supports the dual mandate.

Prior to joining Carnegie Mellon in 2005, Goodfriend was senior vice president and research director at the Federal Reserve Bank of Richmond, where he worked for 27 years.

McWilliams, a former chief counsel and deputy staff director for the committee, would replace Martin Gruenberg, whose five-year term as FDIC chairman expired in November, but who is staying in his position until a new leader is found. McWilliams is executive vice president at Fifth Third Bank, a Cincinnati, Ohio-based regional bank holding company that ranks as the 29th largest banking company in the country with $142 billion in assets as of Sept. 30, 2017.

She was an attorney at the Federal Reserve from 2007 to 2010.

Workman, a lawyer, was the president and chief executive of the Life Insurance Council of New York, an industry trade and lobbying association. He would replace S. Roy Woodall Jr., whose term expired on the FSOC.

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