WASHINGTON — Peter Diamond, the Nobel-prize winning economist, has withdrawn as a nominee for the Federal Reserve Board.
In a New York Times op-ed, Diamond, who has been nominated three times for the post, said the lack of Republican support for his nomination made it clear he would not be confirmed.
"Last October, I won the Nobel Prize in economics for my work on unemployment and the labor market. But I am unqualified to serve on the board of the Federal Reserve — at least according to the Republican senators who have blocked my nomination. How can this be?" Diamond wrote.
While three Senate Banking Committee Republicans had supported Diamond's selection in the administration's first two tries to hire him, Diamond said, he received no GOP support in the most recent committee vote on May 12. The panel approved the nomination with a straight party-lines vote. Following his first nomination, Republicans successfully averted a full Senate vote.
Sen. Richard Shelby, R-Ala., the committee's top Republican, has said Diamond's work on labor issues does not qualify him for the Fed post.
Diamond called out Shelby by name as "the leading opponent to my appointment." He argued that opposition to his nomination not only reflects "partisan polarization," but also "a failure to recognize that analysis of unemployment is crucial to conducting monetary policy."
"Instead of going to the Fed, … I will go about my congenial professional existence as a professor at M.I.T., where I have taught and researched since 1966, and I will take advantage of some of the many opportunities that come to a Nobel laureate. So don't worry about me," Diamond wrote.
"But we should all worry about how distorted the confirmation process has become, and how little understanding of monetary policy there is among some of those responsible for its Congressional oversight. We need to preserve the independence of the Fed from efforts to politicize monetary policy and to limit the Fed's ability to regulate financial firms."
In a statement, Shelby said he hopes the administration will seek Fed governors with greater concern for spending limits.
"I have said many times that I commend Dr. Diamond's talent and career. I wish him the best in the future. It is my hope that President Obama will now nominate someone capable of garnering bipartisan support in the Senate," Shelby said. "It would be my hope that the President will not seek to pack the Fed with those who will use the institution to finance his profligate spending and agenda."
But in a press release, Senate Banking Committee Chairman Tim Johnson, D-S.D., said Republicans had "no reasonable justification for blocking" the confirmation.
"With nearly 14 million Americans unemployed, it is disappointing Republicans would rather play politics than help bring the Federal Reserve to full strength," Johnson said. "Dr. Diamond is a Nobel laureate and one of the world's preeminent experts on labor markets and unemployment. His expertise is clearly relevant to the Federal Reserve's mandate to ensure maximum employment as well as stable prices."
Diamond's withdrawal is yet another sign of the administration's troubles in filling top regulatory jobs. Early this year, North Carolina banking commissioner Joe Smith withdrew his name as a nominee to head the Federal Housing Finance Agency amid stiff opposition from Shelby. Meanwhile, the White House continues to stall in appointing a director for the Consumer Financial Protection Bureau in the face of anticipated GOP resistance to the new agency.