As former Vice Chair of the Federal Reserve Board Lael Brainard takes up her role as head of President Biden’s National Economic Council (NEC), the president would be wise to tap Morgan Stanley’s global chief economist Seth Carpenter to replace her. Carpenter is one of the few in contention for the position that checks all the requisite boxes—not only those required to ensure a successful Senate confirmation, but also those which can appeal to the Democratic party's concerns about the dearth of diversity within the Fed's leadership.
To be sure, replacing Brainard as vice chair is not an easy task. There is significant political pressure to place another woman in the position, and President Biden has already intimated his preference for nominating a Latino for the role. But the president would be ill-advised to focus solely on diversity when picking his candidate. Vice chair of the world’s most powerful central bank is not an unimportant role, and when Brainard moved to the NEC last month there was a veritable intellectual vacuum left behind—a point those in the Senate will not overlook in what is likely to become a rather acrimonious confirmation hearing.
Fortunately, the task is a bit easier today than it has been in years past. President Biden has one candidate on his shortlist which no Senator could reasonably object to—given their unquestionable credentials—and someone who can appeal to those concerned about the Board's lack of diversity. That candidate is Seth Carpenter.
Yes, there are others in contention who can appeal to the party's demands, particularly Nellie Liang at the US Treasury, Mary Daly of the San Francisco Fed, Karen Dynan at Harvard, Janice Eberly at Northwestern, and Lisa Cook, a current Fed Board member. There are also those more familiar to the president, such as Jason Furman who chaired the Council of Economic Advisers during the Obama administration and John Williams, who has been head the New York Fed since 2018. But Carpenter, able to meet the Democrats diversity criterion, can bring a unique view to the role given his prior experience at the Board as Deputy Director of Monetary Affairs and his time as Assistant Secretary for Financial Markets at the Treasury—not to mention his extensive Wall Street experience.
This is a difficult choice for the president. Given the current political climate and the high standards with which we deploy to evaluate potential Board members, replacing an intellectual maverick like Brainard won’t be easy. However, the task before the president is much easier because of Seth Carpenter. He is not a top contender for the job, but he should be.