Senate Confirms Duke to Fed Board

The U.S. Senate on Friday confirmed former Virginia bank executive Elizabeth Duke to the Federal Reserve Board, but didn’t act on two other key nominations at the central bank.

Duke’s confirmation came as part of a deal between the White House and Senate Democrats that also included numerous nominees for other agencies. The deal, however, didn’t include former Capital One Financial Corp. executive Larry Klane, another of President George W. Bush’s nominees for the Fed board, or Fed governor Randall Kroszner, whose term expired in January. Kroszner is staying at the Fed until he is confirmed or replaced.

White House spokeswoman Emily Lawrimore said Senate Democrats offered to confirm Duke or allow President George W. Bush to give both Duke and Klane recess appointments, which would expire at the end of the current Congress. Lawrimore said it wasn’t clear that either nominee would accept a recess appointment.

As a result, the White House accepted the offer on Duke and decided to continue to push for a vote on Klane and Kroszner. Their prospects, however, seem dim in light of Friday’s compromise, which came after weeks of back and forth between the administration and the Senate. Senate Majority Leader Harry Reid (D., Nev.) said the confirmation of Duke, who will serve a term through 2012, will ensure that the Fed can function during the current economic slowdown.

Duke, the former chairman of the American Bankers Association, was the chief operating officer of Portsmouth, Va.-based Towne Bank. She previously held high-level positions at Wachovia Corp. and SouthTrust Corp.

Duke will fill one of two vacancies on the seven-member Fed board. Another vacancy will be created when governor Frederic Mishkin steps down in August. Bush nominated Duke and Klane for the Fed nearly a year ago. Since then, the confirmation process has been held up by the Senate Banking Committee, prompting complaints from the administration that the Fed was undermanned at a critical time for the economy.

In addition to Duke, the Senate confirmed Donald Marron to be a member of the three-person Council of Economic Advisers. The CEA hasn’t been fully staffed since February 2007, and still has one unfilled position. Marron is a former CEA chief economist and deputy director of the Congressional Budget Office. –Henry J. Pulizzi