Bush is Moving to Fill Two Slots at the Federal Reserve

News from Greg Ip and John McKinnon at the Wall Street Journal on Bush's choice to fill the two open seats on the Federal Reserve Board of Governors:

Bush Is Moving To Fill Two Slots At Federal Reserve, by Greg Ip and John D. McKinnon, WSJ: With leadership at the Federal Reserve about to change, the White House is moving to fill two vacancies on the central bank's seven-member board of governors. President Bush plans to soon nominate Kevin M. Warsh, a White House adviser on domestic finance and capital markets, to fill one of the two vacancies, two people familiar with the matter said. Mr. Bush aims to fill the other seat with an academic economist, and the likeliest candidate is Randall S. Kroszner, who teaches at the University of Chicago's Graduate School of Business, one of these people said...

The nominations would tilt the board's composition toward financial-industry expertise rather than macroeconomics. Mr. Warsh, a lawyer by training, was an investment banker at Morgan Stanley before joining the White House National Economic Council. He has been the White House's point person on financial-industry issues. Mr. Kroszner, who served on the Council of Economic Advisers during Mr. Bush's first term, specializes in banking, banking regulation, international-financial crises and monetary economics...

From Brad DeLong on Randall Kroszner [photo/web page, color photo]:

I know I'm proud to have played a (alas, very small) part in the education of Randy Kroszner and Robin Hanson, both far to my right.

From Institutional Economics:

Both Clarida and Kroszner would be excellent appointments.  Appointing non-specialists with financial market backgrounds would be a mistake in my view, increasing the risk of ... regulatory capture by Wall Street...

That doesn't sound like a strong endorsement of Warsh [photo, photo with Bush]. I know little about him. BusinessWeek Online has a bit more, but not much:

Warsh is the NEC's point man for contact with the financial-services industry. He has recently sought to raise his public profile by speaking to more industry groups and was mentioned as a candidate for chairman of the Securities & Exchange Commission before Bush tapped Rep. Christopher Cox (R-Calif.) for the job.

Update: Bloomberg reports that Al Hubbard, director of the White House's National Economic Council, says:

"They're going to fit very, very well'' at the Fed, said Al Hubbard ... in an interview. Warsh, who works for Hubbard, "has terrific business experience, having worked on Wall Street.'' Kroszner is "one of the great economists in our country,''...

The same report notes that a former Fed vice Chairman is not sold on Warsh:

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.'' "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.''

Brad DeLong has questions too.