With Timothy F. Geithner set to take over as Treasury secretary, the speculation intensifies over who will replace him as president of the Federal Reserve Bank of New York.
The Wall Street Journal reported Thursday that Kevin M. Warsh, 38, a current Federal Reserve System governor, is one of the leading candidates to succeed Geithner.
Warsh, a Harvard Law graduate, is not an economist by training.
Kevin M. Warsh
However, he worked in mergers and acquisitions at Morgan Stanley & Co. for almost seven years. In addition, he was an economic adviser in the George W. Bush White House. And he served on that administration’s National Economic Council.
But at the time of his nomination to the Federal Reserve board in January 2006, Warsh may have been better known for connections to wealth.
He’s married to Jane Lauder, his Stanford classmate and the daughter of Ronald Lauder, the cosmetics billionaire, Republican donor and former ambassador to Austria.
As The Wall Street Journal was quick to blog, the questionnaire that accompanied Warsh’s nomination placed the nominee in exclusive company.
Warsh listed his former memberships in the Union Club of the City of New York and The Brook Club, both private clubs.
And he noted that continued to be a member of the Georgica Association, an East Hampton neighborhood on Long Island where Steven Spielberg also resides.
But opposition to Warsh’s nomination focused, not on his wealth, but his lack of a degree in economics and his connections to the White House.
“Kevin Warsh is not a good idea,” the late Preston Martin, a former Fed vice chairman, told Bloomberg News. “If I were on the Senate Banking Committee, I would vote against him.”
Nonetheless, the committee approved Warsh’s nomination unanimously and he went on to become, at 35, the youngest person to ever serve on the seven-member board that oversees monetary policy, supervises banks and performs other duties.
But, according to press reports, Warsh is no longer viewed as a lightweight, given his role in devising and implementing responses to the current economic problems.
Bloomberg News has described him as part of the government’s “front-line crisis team,” joining Geithner, Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke.
“(Warsh) has almost an intuitive understanding of financial markets and credit markets,” Allan Hubbard, Warsh’s former boss at the White House Economic Council, told Bloomberg.
Quoting an anonymous source, the Journal reported that “it’s too early to tell” if Warsh will be named to head the New York Fed.
Warsh does have a connection at the at the bank, as Stephen Friedman, the current chairman of the New York Fed’s board of directors, was his boss at the National Economic Council.
The New York Fed is the largest of the 12 Federal Reserve banks in terms of assets, and the New York president always sits on the Federal Open Markets Committee.
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