Senate panel OKs Diamond as Fed member

A Senate panel on Tuesday approved the nomination of Nobel prize winner Peter Diamond to be a member of the Federal Reserve, marking the second attempt to push through Republican roadblocks.

The Senate Banking Committee, in a 16-7 vote, sent the nomination to the full Senate for consideration.

The seven senators opposing Diamond's nomination were all Republicans. They included Sen. Richard Shelby of Alabama, the top-ranking Republican on the panel.

President Barack Obama nominated Diamond to the Fed in late April. But opposition from some Senate Republicans had stalled the nomination. Opponents have questioned Diamond's practical qualifications for the job.

The Senate Banking Committee in July had approved Diamond's nomination along with two other Obama nominees to serve on the Fed. The Senate confirmed those nominees — Janet Yellen and Sarah Bloom Raskin — in September. They now serve on the Fed's board. But the Senate at that time didn't act on Diamond.

Diamond, an economist at the Massachusetts Institute of Technology, is an authority on Social Security, pensions and taxation. He won the Nobel prize in economics last month.

If confirmed by the Senate, Diamond will bring the Fed's seven-member board in Washington up to full strength. It has been operating for some time without all seven seats filled.

Unfilled seats at the Fed have allowed Obama to put a bigger stamp on the central bank. If Diamond is confirmed, Obama will have appointed five of the seven members of the Fed's board.

Separately, the Fed's decision earlier this month to buy $600 billion in Treasury bonds to invigorate the economy came under fresh attack by a Republican lawmaker on Tuesday.

Rep. Mike Pence of Indiana fears that the Fed's move will spur inflation and dilute the value of the dollar, which could disrupt the global financial system.

"This is not about politics. This is about protecting the dollar," Pence said.

Pence also worries that the Fed is printing money to pay for the federal government's massive debt. "Printing money is no substitute for sound fiscal policy," Pence said. And, it's the job of Congress to put the nation's finances on sound footing, he said.

Pence and Sen. Bob Corker, R-Tenn., offered legislation Tuesday to change the Fed's mission to focus solely on keeping inflation in check. Currently, the Fed has a "dual mandate" from Congress: to keep both inflation and unemployment low.

Corker said the Fed's dual mandate is "confusing" and that the Fed's emphasis should be on keeping inflation low.

Fed Spokeswoman Michelle Smith called the Fed's current dual mandate "appropriate" and said the Fed was not seeking to change it.