Given Friday's surprising employment report, it is understandable that the other big announcement that day -- the one pertaining to governors for the Federal Reserve -- attracted a lot less attention. Yet the news is more consequential for the economy and markets. It is also good news.
Last Friday, President Obama announced his intention to nominate three respected and talented individuals for the Board of Governors of the Federal Reserve: Jerome Powell (a renomination), Lael Brainard, and Stan Fischer.
If approved by the Senate, they would join Janet Yellen's team at the most powerful central bank in the world. (Having been confirmed by Congress last week, Ms. Yellen will succeed Chairman Bernanke at the end of this month.)
Individually, each of the three nominees constitutes a good choice, bringing to the table a different mix of comparative advantages.Together, they form a well-balanced and strong slate at a particularly important time for Fed policy and, therefore, the economic and financial well-being of the country.
Mr. Powell, a lawyer by training, has already served as a Fed Governor for almost two years. He brought to the Fed valuable experience gained at the Treasury under President George W. Bush and in the private sector. He also offers continuity at a potentially fluid time for the economy and markets.
Ms. Brainard was at the Treasury more recently, having served until November of last year as Under Secretary for International Affairs. With an economics Ph.D. from Harvard and time at the Brookings Institution, she brings to the Fed strong international policy and academic expertise.
The most inspired choice is that of Stan Fischer, who is also being nominated for vice chair. With Ms. Yellen as chair and Mr. Fischer as vice chair, the country would have a dream team at the head of the Fed.
Mr. Fischer's admirable qualities go beyond his enormous and highly-admired talent, experience, and personal integrity (all of which I observed first hand when we worked together at the IMF back in the 1990s. As I wrote in the Financial Times in June 2011 when Mr. Fischer was a candidate for the head of the IMF, he is also world class economist who uses his brilliance to engage rather than intimidate others.
We should never underestimate the importance for the country of having the best at the Fed -- and especially when political polarization and Congressional dysfunction limit what the administration can implement.
These days, the Fed has little choice but to take a disproportionate leadership role in economic policy making. In doing so, it inevitably has to use experimental and untested policy measures; and does so without the luxury of being able to refer to time-tested analytical models, historical precedents and/or established playbooks.
To succeed, the Fed needs policy makers who are innovative and bold thinkers, who are anchored by a solid foundation, and who are open to new information and can internalize it quickly. They also need to be responsive and cooperative enough to evolve their policy stance as conditions warrant.
In such a context, and given Chairman Bernanke's departure, it is highly promising and encouraging that -- following Ms. Yellen's confirmation, in the nominated slate of Governors, and given existing officials at the Fed -- the country would have the right mix at the right time at our central bank.
Cross-posted from CNBC.com.