–Senate Banking Committee Approves Nominee 16 to 7
–Senate Banking Chief Dodd: Diamond Is Qualified To Sit on Fed
–Sen. Shelby: Now Opposes Diamond Because of Residency Issues

By John Shaw

WASHINGTON (MNI) – The Senate Banking Committee voted Tuesday to
approve Peter Diamond to be a governor on the Federal Reserve Board.

The vote was 16 to 7, with all seven ‘No’ votes cast by
Republicans.

This was the second time the Banking Committee has approved
Diamond’s nomination this year.

The Banking Committee approved Diamond’s nomination in July on the
same 16 to 7 vote.

At that time, Senate Republicans refused to waive a rule that
requires pending nominations to be returned to the White House if the
Senate is out of session for more than 30 days as it was this past
August and early September.

Obama resubmitted Diamond’s nomination in September.

Sen. Richard Shelby, the ranking Republican on the Banking
Committee, opposed Diamond’s nomination in the summer and continued to
do so in Tuesday’s vote.

Last summer, Shelby argued that Diamond had insufficient experience
on monetary policy to serve on the central bank. Diamond is an expert on
tax policy and recently won the Nobel Prize for economics.

In Tuesday’s vote, Shelby argued that Diamond is from the same Fed
district as Daniel Tarullo and charged this would be a technical
violation of the law.

Senate Banking Committee Chairman Chris Dodd responded by citing
the legislative history of the statute, arguing that the restriction
Shelby cited was never meant to be applied rigidly.

He identified seven examples in the last decade in which a Fed
governor’s residency would have been a technical violation of the law.

Dodd said Diamond is “highly regarded … as a mainstream
economist” and had already been “strongly endorsed” by the Banking
Committee.

The opposition of a large block of Republican senators will make it
difficult for Diamond to win confirmation in the Lame Duck session.

Earlier this year, the Banking Committee and full Senate approved
the nomination of Janet Yellen to serve as vice chairman of the Fed and
Sarah Bloom Raskin to serve as a Fed governor.

** Market News International Washington Bureau: (202) 371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$,MMUFE$]