Diamond says will withdraw as Fed nominee

WASHINGTON (Reuters) – Nobel Prize winner Peter Diamond said on Sunday he planned to withdraw as a nominee for Federal Reserve governor, after his nomination was repeatedly attacked by Republicans.

“It is time for me to withdraw, as I plan to inform the White House,” Diamond, an M.I.T. economics professor, wrote in an opinion piece published in the New York Times titled “When a Nobel Prize isn’t enough.”

The top Republican on the Senate Banking Committee, Richard Shelby, has criticized Diamond, saying he lacks monetary policy experience.

Diamond’s withdrawal leaves the White House with two vacancies to fill on the seven-seat Fed board.

Diamond’s nomination fell victim to Republican score settling — under Democratic control, the Senate in recent years blocked a nominee of Republican President George W. Bush. Another factor was a newly invigorated opposition to government and monetary intervention to stimulate economic growth during recessions.

In his article, Diamond bemoaned the rise of political pressures on central bank decision-making.

“We should all worry about how distorted the confirmation process has become, and how little understanding of monetary policy there is among some of those responsible for its Congressional oversight,” he said.

“We need to preserve the independence of the Fed from efforts to politicize monetary policy and to limit the Fed’s ability to regulate financial firms.”