Time to govern

The Federal Reserve is one of the most powerful institutions in the world. Yet, its board has been playing shorthanded since 2006.

The White House nominated two qualified and respected candidates to restore the central bank to its full seven-member strength. One is even a Republican. The poisonous environment on Capitol Hill makes their confirmation anything but certain. This time around, though, using the nomination process to settle scores in legislative horse-trading carries added risk to global financial markets.

Though the Senate Banking Committee, which held a hearing on Tuesday, is expected to give Harvard University economist Jeremy Stein and private-equity executive Jerome Powell its nod as early as next week, the bipartisan pair still have to win over the full Senate. The last candidate — Nobel Prize-winning Peter Diamond — withdrew from the process in disgust after Republicans used his nomination to exact revenge on Democrats and to show the Fed, which many senators considered to be overly activist, who is boss. And, that was all before President Obama’s recess appointment of Richard Cordray to the controversial Consumer Finance Protection Bureau earlier this year.

If lawmakers fail to swiftly confirm Stein and Powell, they risk leaving the Fed understaffed until after the presidential election in November. That may not seem like a big deal, since Ben Bernanke has said the Fed expects to stand pat until 2014.