The White House is considering former Treasury Department official Richard Clarida for the Federal Reserve's vice chairman position, according to a Wall Street Journal report that cited "two people familiar with the matter."
Clarida is a managing director at the money management firm Pacific Investment Management Co. LLC and teaches at Columbia University. He was assistant secretary for economic policy at the Treasury Department in 2002 and 2003 and had also been senior staff economist at the Council of Economic Advisers under former President Ronald Reagan.
The previous Fed vice chairman, Stanley Fischer, resigned earlier this year.
Lawrence Lindsey, another former George W. Bush administration economist, is being considered for that spot, the WSJ reported. CNBC reported Dec. 21 that Lindsey, a former Fed governor and National Economic Council director, was "interested in exploring the position." Lindsey is currently president and CEO of The Lindsey Group economic advising firm.
The Obama administration had considered appointing Clarida to the Fed's Board of Governors in 2011, according to a report at the time from the WSJ. White House officials were hoping Clarida's background working with Republican presidents would ease the confirmation process both for him and Jeremy Stein, who had worked in the Obama administration. Ultimately, though, Obama decided to appoint Jerome Powell and Stein to the Fed board.
Clarida's work on the "new neutral" long-term federal funds rate has gotten some attention. In 2014, he and others at PIMCO began outlining their prediction that the Fed and other central banks will face lower neutral interest rates in the coming years than the ones they had before the financial crisis. The neutral rate is one that neither boosts nor slows down an economy.
Several Fed officials have since indicated the federal funds rate may not need to rise back up to its pre-recession level. At her Dec. 13 news conference, for example, Fed Chair Janet Yellen said the benchmark rate "would not have to rise much further to get to a neutral policy stance" and that the Federal Open Market Committee thinks the longer-run neutral federal funds rate "is likely to remain below levels that prevailed in previous decades."
Clarida praised Powell's appointment as the new Fed chair, writing in a PIMCO blog post that he was a "smart choice" who will likely continue Yellen's approach on monetary policy.
Lindsey, meanwhile, has spoken positively about Yellen, saying in a 2014 CNBC interview after she was appointed that she was a "great choice" to lead the Fed.
Lindsey warned in 2015 that the Fed needed to get going on raising interest rates, saying there were major risks to keeping the federal funds rate near zero for much longer. He said the Fed needed to start raising rates slowly so that it was not forced to increase too quickly as other events popped up.
"At some point, we're going to get a series of bad numbers, showing a little higher inflation and the market is going to say ... 'We're so far behind the curve,' and [that will] force an adjustment that is going to be wrenching," he said at an event in May 2015, according to a MarketWatch report.
His name was in the news often when the Bush administration was considering invading Iraq. Lindsey, who led the National Economic Council at the time, stepped down after he projected that a war with Iraq could cost somewhere between $100 billion and $200 billion, a figure that other administration officials deemed was too high.