Bush gives Federal Reserve Board seat to White House crony

I saw this off the Washington Monthly blogsite, so I wanted to go back to the original source of the story. This is actually from The New Republic Online:

You didn't have to be Karl Rove to figure out that George W. Bush needed a respected economist to fill Alan Greenspan's shoes. Coming on the heels of the p.r. disasters that were Michael Brown and Harriet Miers, the last thing the White House could afford was another crony appointment. And so, in October, Bush nominated former Princeton economist Ben Bernanke to replace the outgoing Greenspan. Bernanke happens to be one of the world's leading experts on monetary policy.

Then came January. It turns out that, in addition to appointing a new Fed chairman, the Bushies also had two seats to fill on the Federal Reserve board, whose interest rate-setting power makes it by far the most influential actor in the global economy. One of these seats went to a University of Chicago professor and former White House economist named Randall Kroszner. Kroszner is an impeccably credentialed right-of-center candidate who, though a little young (he's 43), is basically the kind of person you'd expect a Republican president to nominate. And the other? It went to a 35-year-old White House aide named Kevin Warsh. Other than a Harvard Law degree and four years in the White House, the only qualification that jumps out at you is the $165,000-plus his father-in-law has donated to various Republican committees since 2002. Warsh may be perfectly capable of hazarding opinions about the future of the economy. But, by that standard, there are tens of thousands of people entitled to a seat on the Fed. That makes Warsh's appointment a big step down a slippery slope that could eventually erode the institution's competence.

President Bush gave a seat on the Federal Reserve Board to a White House crony? Placing a lawyer on the Federal Reserve Board--the nation's powerful central bank? A lawyer? What is even worst, is this little story from CNN.Com:

WASHINGTON (Reuters) - The Senate Friday approved the nominations of University of Chicago economist Randall Kroszner and White House aide Kevin Warsh to be members of the Federal Reserve Board.

The nominees were confirmed without debate.

With the Senate vote, President Bush has now put a firm stamp on the central bank, having appointed all seven members of the Fed's Washington-based board -- the first president to do so since Reagan in 1988.

Fed Vice Chairman Roger Ferguson, the only Democrat, was initially appointed by President Clinton. Board member Donald Kohn is a political independent.

The board lies at the heart of U.S. monetary policy-making and as such wields great influence over the direction of the world's largest economy.

The Federal Reserve is the heart of the U.S. monetary policy-making. The Fed yields enormous power in regulating the money supply, setting interest rates, raising and lowering rates, determines how much inflation the economy is generating. Wall Street investment firms, banks, hedge funds, pension funds, other nation's central banks--just about anyone who deals within the U.S. economy closely watches the Fed, to determine how the Fed would react to economic issues, data, and try to gauge the direction the U.S. economy is going. And President Bush places a lawyer on the Federal Reserve Board. But what is more astonishing is that the Senate voted to confirm Warsh without any debate! There was no debate in the Senate--they just rubber-stamped Warsh on the board! A White House flunkie is now on the board of the most powerful central bank in the world.

But it gets better. Here's a little background story from Bloomberg:

Preston Martin, who was Fed vice chairman from 1982 to 1986. called Kroszner ``a brilliant choice because he has served in many categories around and in the Federal Reserve system.''

Warsh graduated from Stanford University in 1992 with a bachelor's degree in public policy and from Harvard Law School in 1995. He married Jane Lauder, the granddaughter of cosmetics pioneer Estee Lauder, in 2002 at an estate in Palm Beach, Florida, and lives primarily in Washington, according to an April 2005 article in the New York Times.

He was hired by Morgan Stanley as an associate in August 1996, at the age of 26, and then promoted to vice president in investment banking and later to executive director.

``If I were on the Senate committee, I'd vote yes for Kroszner and no for Warsh,'' said Martin. ``I have great reservations about Warsh because he just doesn't have the background.''

So Warsh is married to the granddaughter of Estee Lauder, meaning he's a part of the old money, corporate elitist group that loves President Bush. Warsh played the neocon game in Bush's White House, and now the president is going to reward Warsh with a Federal Reserve Board seat.

This game of cronyism continues on.