President Barack Obama will announce Tuesday that he plans to nominate a Harvard University finance professor and a former private-equity executive to fill the two vacancies on the seven-member Federal Reserve Board, a White House official said.
The nominees are Jeremy Stein, 51, an economist who did a five-month stint in the Treasury and White House in the early months of the Obama administration, and Jerome Powell, 58, who was undersecretary of the Treasury for domestic finance in the early 1990s during the George W. Bush administration.
If confirmed by the Senate, Mr. Stein, who earned his Ph.D. at the Massachusetts Institute of Technology, would increase the number of economists on the Fed board to three. Mr. Stein has been on the Harvard economics faculty since 2000, and previously taught at M.I.T. and Harvard Business School.
A former president of the American Finance Association, he has published on a range of matters that fall within the Fed's purview. Mr. Stein has, for instance, endorsed imposing "significantly higher capital standards on large financial institutions" and requiring them to issue debt that would be forcibly converted into equity in bad times. And he recently co-authored a paper on one of the Fed's newest tools: its ability to pay interest on reserves that banks deposit with it. According to his web site, Mr. Stein has been a consultant to Guggenheim Partners on asset-management strategies and given paid speeches at several big banks.
Mr. Powell would fill a different niche on the Fed board, which has been without a governor with Wall Street experience since Kevin Warsh, a Morgan Stanley alumnus, left in April. A lawyer, Mr. Powell worked before and after his Treasury stint at investment bank Dillon Read & Co. He also has worked at private equity firms Carlyle Group and Global Environment Fund and at Bankers Trust Co.
Known as Jay, Mr. Powell lately has been a visiting scholar at the Bipartisan Policy Center, a Washington think tank, where he took a high-profile role over the summer warning about the adverse consequences of a failure to lift the federal debt ceiling.
By packaging a Democrat and a Republican for the Fed seats, Mr. Obama is making an attempt to surmount what have become formidable obstacles to Senate confirmation. Although presidents usually appoint Fed governors from their own parties, an explicit Democrat-Republican nomination is unusual. The law requires that some federal regulatory agencies--the Securities and Exchange Commission, for instance--have appointees from both parties, but there is no such requirement for the Fed.
An earlier administration attempt to win confirmation by packaging Republican and Democratic nominees to the Federal Deposit Insurance Corp. board failed when Republican Senate leader Mitch McConnell of Kentucky blocked a confirmation vote.
In April 2010, Mr. Obama made three nominations to the Fed, all Democratic-leaning. Two were confirmed: Janet Yellen and Sarah Bloom Raskin. The third, Peter Diamond, a Massachusetts Institute of Technology economist and Nobel laureate, was blocked by Sen. Richard Shelby of Alabama, the senior Republican on the Senate Banking Committee, and eventually withdrew.
Mr. Obama is to nominate Mr. Powell for a term that expires Jan. 31, 2014 and Mr. Stein for one that expires Jan. 31, 2018.
The term of Fed governor Betsy Duke, who was appointed by President George H. W. Bush, expires Jan. 31, 2012. She can serve until a successor is confirmed, and has indicated she plans to do so. Fed Chairman Ben Bernanke's term as chairman expires Jan. 31, 2014. He is not expected to seek reappointment.
Campaign-finance records show Mr. Stein contributed to Mr. Obama's 2008 campaign. Mr. Powell contributed to John McCain's presidential campaign in that year. This year, he has contributed to the campaigns of Republican candidates Mitt Romney and Jon Huntsman.
Mr. Obama has yet to nominate anyone for a new Fed position created by the Dodd-Frank financial regulation law--vice chairman for supervision and regulatory policy.
