After it emerged that the recently appointed Chicago Fed president Austan Goolsbee - prominent Democratic politician and Obama advisor - got the job thanks to the recommendation of a firm which employs his wife, casting into doubt the objectivity not only of the selection process but of Goolsbee's qualifications and thereby destroying any chance Goolsbee had of failing up even more and taking the Fed vice chair seat recently vacated by Lael Brainard, the list of potential candidates shrank to just a few potential names.
Well, as of this evening, the number of possible Lael Brainard replacements has shrank to just one, and according to Bloomberg the frontrunner in the White House search for the new Fed vice chair is Northwestern University Professor Janice Eberly.
Citing "people familiar", Bloomberg reports that Eberly - who served as chief economist at the Treasury Department under Barack Obama - has emerged quickly as a candidate in the weeks since Brainard was picked as President Joe Biden’s top economic aide. As part of her vetting process, Eberly met for an interview with Jeff Zients, Biden’s chief of staff, as well as with Brainard and Treasury Secretary Janet Yellen, a former Fed chair. A final decision has yet to be made made.
The Biden administration has indicated that it wants to fill the crucial position relatively soon, although preferably with a candidate that fits the mandatory Democrat identity policy checklist: a woman, a racial minority, or LGBTQ. Eberly, to the best of our knowledge, checks at least one of these boxes. Biden also been urged to choose a Latino candidate to succeed Brainard, with 34 lawmakers signing a letter calling for such a trailblazing appointment.
For some progressives that's not enough, however, and they have been urging the White House to fill the vacancy with someone who would do more to defend the Fed’s mandate to support the labor market, and be less likely to push for further interest-rate hikes they warn could derail the economy. In other words, someone who is willing to nudge up the Fed's inflation target.
White House Press Secretary Karine Jean-Pierre said Monday that the White House would announce developments “in the near future.”
Bharat Ramamurti, deputy director of the White House National Economic Council, told Bloomberg Television this week that the administration wants to “find somebody who truly believes in the Fed’s dual mandate, somebody who believes in the president’s economic vision.”
Eberly, if nominated, could run into opposition from lawmakers who have pushed for more diversity among the Fed’s upper ranks, testing Biden’s support in the Senate. Biden’s nominee must be confirmed by the US Senate, where Democrats hold a slim majority.
Other names that have been in the mix for the role include Harvard University professor Karen Dynan, who along with Eberly was seen as a leading candidate for the position. While Dynan also held a key role in the Obama administration, succeeding Eberly as chief economist at the Treasury, Eberly is seen as the more dovish of the two, Bloomberg Chief US Economist Anna Wong wrote in a research analysis.
Dynan would be one of the Fed’s most hawkish voices, Wong projected. “Eberly, on the other hand, might be closer to Brainard in her optimism that the Fed can get inflation back to target without generating a significant slowdown in the labor market,” Wong wrote.
Here is some more on Eberly's bio from her page at Northwestern:
Janice Eberly is the Senior Associate Dean for Strategy and Academics, the James R. and Helen D. Russell Professor of Finance and former Chair of the Finance Department. Before joining the Kellogg faculty, she was a faculty member in Finance at the Wharton School of the University of Pennsylvania.
Professor Eberly served as the Assistant Secretary for Economic Policy at the U.S. Treasury from 2011 to 2013 after being confirmed by the U.S. Senate. In that capacity she was the Chief Economist at the Treasury, leading the Office of Economic Policy in analysis of the U.S. and global economies and financial markets and development of policy recommendations on micro and macroeconomic issues.
Professor Eberly's research focuses on finance and macroeconomics. Her work studies firms' capital budgeting and investment decisions and household consumption and portfolio choice. She also examines the interaction of these spending and investment choices with the macroeconomy. Her current research emphasizes household finance and intangible investment. Her work has been published in the American Economic Review, the Journal of Political Economy, Econometrica, and the Quarterly Journal of Economics, among other academic journals. She has received a Sloan Foundation research fellowship and grant funding from the National Science Foundation and the CME Trust.
Professor Eberly has been an Associate Editor of the American Economic Review and other academic journals and Senior Associate Editor of the Journal of Monetary Economics. Previously Professor Eberly served on the staff of the President's Council of Economic Advisors and on the advisory committees of the Bureau of Economic Analysis (BEA) and the Congressional Budget Office (CBO). She was elected Vice President of the American Economic Association for 2020.
Professor Eberly is an elected Fellow of the American Academy of Arts and Sciences and is Editor of the Brookings Papers on Economic Activity. She has won numerous awards for her teaching, including Chairs' Core Teaching Awards and Outstanding Professor Awards from the Executive Master's Program. She is a Trustee of the TIAA-CREF funds since 2018. Professor Eberly received her Ph.D. in Economics from MIT.
Her full CV is here.