Obama to nominate economist, banker, as Fed governors

US President Barack Obama will nominate Harvard economist Jeremy Stein and Jerome Powell, an investment banker and former Treasury official, to the two empty seats on the Federal Reserve's policy-setting board of governors.

The White House's pick of candidates, who have Democratic and Republican credentials respectively, may help speed their nomination through Congress amid a sluggish economic recovery that has failed to put a major dent in the unemployment rate, now at 8.6 percent.

While neither has laid out detailed views on monetary policy, Stein wrote a paper earlier this year suggesting he would back the Fed's unconventional efforts to keep down long-term borrowing costs, which have been controversial in Washington. The Fed for over three years has adopted an array of radical measures to keep interest rates low and spur recovery.

Stein, who previously worked for the Obama administration as an adviser to the Treasury secretary and a National Economic Council staff member, specializes in stock price behavior, corporate investment and financing decisions, risk management and capital allocation inside firms. He declined to comment on his nomination.

The choice of Powell, who served at the Treasury during President George H. W. Bush's term in the late 1980s and early 1990s, could be aimed at mollifying Senate Republicans. They blocked Peter Diamond, a Massachusetts Institute of Technology economist, saying the Nobel prize winner was not qualified for the job and was too sympathetic to government intervention in the economy.

Powell is a lawyer by training and worked at Dillon, Read and Bankers Trust Co. after leaving the senior Bush administration and before joining Carlyle Group. His knowledge of financial markets could help him fill the gap left by Kevin Warsh, a former Morgan Stanley executive who acted as Chairman Ben Bernanke's point-man for crisis negotiations.