MIT’s Diamond to withdraw Fed nomination

By Globe Staff

MIT professor Peter Diamond said that in the face of Republican opposition, he will ask the White House to withdraw his nomination to serve on the Federal Reserve’s board of governors.

Peter Diamond. (Photo credit: Donna Coveney/MIT)

Diamond disclosed his decision not to seek the position in an opinion article posted yesterday on the New York Times website.

Diamond is a recent Nobel laureate.

In his New York Times article, the Massachusetts Institute of Technology professor wrote: “Last October, I won the Nobel Prize in Economics for my work on unemployment and the labor market. But I am unqualified to serve on the board of the Federal Reserve --- at least according to the Republican senators who have blocked my nomination. How can this be?”

His chief Republican critic, Senator Richard Shelby of Alabama, claims that Diamond does not have any experience in conducting monetary policy.

But in his article, Diamond said that understanding the labor market “is critical to devising an effective monetary policy.”

(To read Diamond’s article, please click here.)

Last month, Diamond’s nomination for a Federal Reserve Board seat was approved for a third time by the Senate Banking Committee, but Republican opposition made confirmation by the full Senate unlikely.

Diamond’s nomination needed the support of some Republicans because Democrats are short of the 60 votes needed in the Senate to override procedural moves to block the nomination.

In March, Shelby, the ranking Republican on the Banking Committee, reiterated his opposition to Diamond’s nomination.

“Although Dr. Diamond is a skilled and accomplished theoretical economist, it is clear to many of us that he does not possess the appropriate background, experience, or policy preferences to serve on the Board of Governors,” Shelby said.