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In Praise of Jeremy Stein, Obama's New Fed Board Nominee

Just a quick word about Jeremy Stein, the Harvard financial economist Obama is nominating to serve on the Federal Reserve Board. I suspect critics on the left (and perhaps on the right) will seize on the fact that Stein was close to Larry Summers, who brought him into the Obama administration to work at the NEC. For what it’s worth, I actually became pretty familiar with Stein’s track record while researching my forthcoming book on the Obama economic team. I can report that he’s an absolutely terrific choice. He was consistently on the side of more capital for banks (often to the discomfort of other Obama officials and regulators throughout Washington). Relatedly, he was in favor of bank shareholders suffering large losses through dilution, and even favored foisting losses onto some of the banks' junior debt-holders, which put him at odds with colleagues in Tim Geithner’s Treasury Department. Anyway, anyone frustrated with a generally overly-credulous, overly-sympathetic posture toward the banks among the powers-that-be in Washington should want to see Stein confirmed.

P.S. For what it’s worth, Summers himself often took Stein's side of the internal debates over the banks, which will probably surprise a lot of liberals. (Though Summers tended to not go quite as far as Stein.)