Trump to name former central bank economist Nellie Liang to Fed board

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President Donald Trump plans to nominate Nellie Liang, a former Federal Reserve economist, to the central bank’s Board of Governors, the White House announced Wednesday.

Liang is currently a senior fellow at the Brookings Institution in Washington and previously led a Fed board division in charge of financial stability policy and research.

She would join the Fed board as the central bank confronts a build-up of financial risk. The gradual pace of rate hikes and low long-term interest rates globally have caused investors to take on more risk as they search for higher returns.

At least four Fed officials have called on the Fed board to raise bank capital standards to build a larger bulwark against a market downturn. Liang would be a forceful voice in that debate.

“She’s a phenomenal choice,” said Julia Coronado, a former Fed staff economist and founder of Macropolicy Perspectives LLC in New York. “She has incredible depth in financial markets. She led the restructuring of their regulatory framework ”

Liang and co-authors from the International Monetary Fund published a paper last month finding that looser financial conditions that bolster economic growth in the near-term carry heightened risks of significant slowdowns or recession in the future.

Liang rose through the ranks at the Fed to become the first head of a new division created after the 2008 financial crisis by former chairman Ben Bernanke to monitor and research financial stability issues. Liang had direct access to Fed governors as head of the division, enhancing her influence.

Liang is a firm believer in market systems, and that the Fed’s job isn’t to bail out losers or provide a safety net for excesses. She hews closely to research and data analysis and avoids offering opinions on topics she hasn’t studied.

Liang has worked since February 2017 at Brookings, where she’s affiliated with the Hutchins Center on Fiscal and Monetary Policy.

Glenn Hutchins, the private-equity financier who established the center with a $10 million donation five years ago, is a board member at the New York Fed and was co-chair of the committee that selected John Williams to lead that institution.

Fed Chairman Jerome Powell has worked with Liang. He held a party at his Maryland home last year when Liang departed the Fed.

Liang will fill the remainder of board term that expires in 2024. Her nomination must be confirmed by the Senate.

Bloomberg News
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