PrestoPundit

Hayek Fan Nominated for the Fed Board

Posted by PrestoPundit on 01/27/2006

From Bloomberg:

White House economic aide Kevin Warsh and University of Chicago economist Randall Kroszner, a former adviser to President George W. Bush, will be nominated to fill two vacancies on the Federal Reserve Board, people familiar with the decision said ..

Kroszner is best known for his academic work on financial institutions. His research has compared bank failure rates before and after the Great Depression, finding that banking regulation has done little to improve the safety and soundness of the nation’s financial institutions.

Kroszner is “well-respected in the economics profession and “would bring even greater research background having to do with regulation,” Broaddus said.

Much of Kroszner’s work expresses skepticism about government attempts to fix economic problems. In a January 2004 interview with the Richmond Fed’s “Region Focus” magazine, Kroszner said Friedrich Hayek and Milton Friedman, both Nobel Prize winners, were the two economists who most influenced him. Both are famous critics of socialism and government intervention in the economy.

“I am a great believer in the power and importance of free market,” he told the Richmond Fed publication. “It’s not because I think those markets work perfectly; it’s because I can’t think of a better alternative.”

Warsh, 35, an investment banker at Morgan Stanley in New York from 1996 to 2002, has been executive secretary of Bush’s National Economic Council and special assistant to the president for economic policy. Kroszner, 43, has been a professor at Chicago since 1990. He was a member of Bush’s Council of Economic Advisers from 2001 to 2003.

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