WASHINGTON — The Senate Banking Committee voted Wednesday to approve three nominees to the Federal Reserve Board of Governors, including Janet Yellen as vice chairman of the central bank's board.
The lawmakers also approved fellow nominees Peter Diamond, an economist at the Massachusetts Institute of Technology, and Maryland bank regulator Sarah Bloom Raskin.
Sen. Christopher Dodd, D-Conn., chairman of the banking panel, said there was no realistic chance that the full Senate would take up the nominations before the August recess, but said he hoped the chamber would in September when lawmakers returned to Washington, D.C.
"The members of the board will clearly have their hands full...in the coming years," Dodd said, adding that he enthusiastically supported the nominees.
The panel voted 17-6 to approve Yellen as vice chair. Lawmakers voted 16-7 in favor of Diamond's candidacy and 21-2 in favor of Bloom Raskin.
Sen. Richard Shelby, R-Ala., the top Republican on the panel, said that, while he supported Bloom Raskin, he wouldn't vote for the other two nominees.
He said the current economic uncertainty wasn't conducive to a member of the Fed's board learning on the job, which he believed would be the case if Diamond were named to the board.
"I don't believe he is ready to be a member of the Federal Reserve," Shelby said.
Shelby said he would oppose Yellen's nomination to be vice chair because she "presided over a regional housing bubble and failed to restrain excess."
Yellen is the current president of the San Francisco Federal Reserve Bank.
Two governor slots on the Fed board have been vacant since Jan. 21, 2009, and Aug. 31, 2009, respectively, which has added to the burden on the shoulders of the board's current members.
The banking panel held a hearing two weeks ago at which lawmakers broadly praised the nominees.
This week, in response to written questions from lawmakers on the committee, Yellen said she would be opposed to raising the Fed's inflation target to help manage the economy. She said the Fed could lose credibility as an inflation fighter if it were to target a higher rate of consumer prices.
The notion of doubling the Fed's inflation target to 4% has been raised by some leading economists, notably including Olivier Blanchard, chief economist at the International Monetary Fund.
Assuming that Yellen is confirmed by the full Senate, the Obama administration would have to find a replacement for her as head of the San Francisco Fed.