WASHINGTON The White Houses strategy to remake the Federal Reserve Board is finally coming into focus after five months of intensive behind-the-scenes reviews by the new administration.
Moving on the first of four new Fed governors he will select, President Bush announced Friday that he will nominate Susan Schmidt Bies, executive vice president of First Tennessee National Corp., for a term ending Jan. 31, 2012.
If confirmed by the Senate, Ms. Bies would fill one of the two vacancies on the seven-member board. White House officials whose methodical way of making all appointments has resulted in a slow, backlogged process apparently had their hand forced on naming Ms. Bies when Fed Governor Edward W. Kelley Jr. announced a week ago that he would resign as soon as one of the vacancies is filled.
Besides replacing Mr. Kelley and filling the second vacancy that existed before his inauguration, President Bush will be able to pick a successor to Fed Governor Laurence H. Meyer, who has said he will not seek renomination when his term expires in January.
President Bushs first Fed nomination was in March, when he renominated Fed Vice Chairman Roger W. Ferguson Jr., who had been named to his first term by President Clinton to succeed Lawrence B. Lindsey, who is now President Bushs chief economic adviser.
Mr. Fergusons first term expired early last year, and President Clinton renominated him. But in keeping with Senate tradition close to an election, then-Senate Banking Committee Chairman Phil Gramm, R-Tex., never scheduled a confirmation hearing.
If confirmed, Ms. Bies would become the only banker and only woman on a board that many in the industry have complained is too laden with economists.
She is an economist by trade and training but also has handled nuts-and-bolts issues for First Tennessee, which she joined as an economist in 1979. For example, she found out how long customers have to wait in line before being served by a teller, she told American Banker in a 1985 interview.
Her first job, in 1970, after earning her masters degree and doctorate in economics from Northwestern University, was as an economist for the Federal Reserve Bank of St. Louis.
Now she is in charge of First Tennessees risk management, auditing, and security, and is a member of the countrys accounting policy-setting Financial Accounting Standards Board.
Known for her energetic and outspoken personality, Ms. Bies is not going to be a wallflower on the board, said Donna Fisher, the American Bankers Associations director of tax and accounting and a personal friend of Ms. Bies.
With the power to name more than half of the Fed board, President Bush has more leeway than past presidents in complying with the Federal Reserve Act of 1913, which mandates that board members be from different Fed districts, and that the President have due regard to a fair representation of the financial, agricultural, industrial and commercial interests, and geographical divisions of the country.
Ms. Bies, who would not comment for this article, would qualify as a financial interests representative, and would also fulfill the political need for a woman on the currently all-male board.
She has spoken out on equality issues before. Theres still a lot of discrimination about women filling certain roles, both in society and in business, she said in the interview 16 years ago. I say accept that fact and then try to show that, on your own ability, you should be recognized.
Ms. Bies a native New Yorker and Memphis resident would represent the Chicago district, where she attended graduate school.
Chairman Alan Greenspan represents New York, Mr. Ferguson represents Boston, Mr. Kelley represents Dallas, Mr. Meyer represents St. Louis, and Governor Edward M. Gramlich represents Richmond, Va.
President Bush would be able to satisfy both agricultural interests and the need for more women on the board by naming Terry Jorde, president and chief executive officer of $34.6 million-asset CountryBank USA in Cando, N.D. House Majority Leader Richard Armey, R-Tex., a Cando native, has spoken to President Bush on her behalf, he told American Banker last month. Also talking her up are Sen. Byron L. Dorgan, D-N.D., and Republican North Dakota Governor John Hoeven.
She could be a Minneapolis district representative, but another name in the mix is Mark Olson, a former American Bankers Association president and Banking Committee aide to former Sen. Rod Grams, R-Minn., who was defeated in his reelection bid last year.
Sources told American Banker last week that on the short list to fill Mr. Kelleys Dallas slot is Texas banker Alfonso Martinez-Fonts Jr., the Cuban-born chairman and chief executive officer of J.P. Morgan Chase Bank of Texas in El Paso.
It is hard to pinpoint what qualifies a governor-to-be to represent a district. Its there, but its not usually honored, said Bert Ely, a northern Virginia-based banking consultant and Fed watcher.