Global Economics

[runawayjimbo]

For the record, I don't think Yellen would be any better. But her confirmation would be way easier. Plus, the historical significance of the first female Fed chair screams Obama to me.

Not trying to say I told you so, but...

http://www.bloomberg.com/news/2013-10-08/yellen-to-be-named-fed-chairman-as-obama-taps-first-female-chief.html

Yellen to Be Named Fed Chairman, First Female Chief

President Barack Obama will nominate Janet Yellen as chairman of the Federal Reserve, which would put the world's most powerful central bank in the hands of a key architect of its unprecedented stimulus program and the first female leader in its 100-year history.

Obama will announce the nomination at 3 p.m. tomorrow, a White House official said in an e-mailed statement. Yellen, 67, would succeed Ben S. Bernanke, whose term expires on Jan. 31.

Obama turned to Yellen, vice chairman of the Fed since 2010, after the other leading candidate, former Treasury secretary and White House economic adviser Lawrence Summers, withdrew from consideration amid mounting opposition from Democrats on the Senate Banking Committee.

Senate Banking Committee Chairman Tim Johnson, a South Dakota Democrat, pledged to work with the committee "to move her nomination forward in a timely manner."

"She has a depth of experience that is second to none," Johnson said in a statement. He also thanked Bernanke for "his incredible service our country" during "one of the most turbulent economic times in our nation's history."

U.S. index futures climbed, signaling stocks may rebound from the biggest loss since August, and Australia's dollar strengthened after the announcement.

Standard & Poor's 500 Index futures added 0.4 percent by 8:27 a.m. in Tokyo, after the gauge slumped 1.2 percent in its biggest decline since Aug. 27 in New York. The Australian and New Zealand currencies rallied at least 0.2 percent versus the greenback and the Swiss franc also gained.

Public Contest

The president's choice followed a polarizing and unprecedented public contest for a nomination that Obama described in August as one of the most important decisions of his presidency.

Yellen was the favorite in surveys of economists and had the backing of 20 members of the Senate Democratic caucus who signed a July 26 letter to Obama.

As a top deputy to Bernanke, Yellen supported the central bank's unprecedented bond buying programs and was a driving force behind a new strategy adopted in 2012 to commit the central bank to goals on inflation and unemployment.

As the Fed's No. 2 official, she has articulated the case for maintaining highly accommodative monetary policy. In a series of 2012 speeches, she outlined why interest rates could remain near zero into late 2015, and in a 2011 speech she justified the Fed's first two rounds of large-scale asset purchases with an estimate that the programs would create 3 million jobs.

Range of Experience

"She's even more of a dove than Bernanke is, but there's nobody who can say she's not credentialed because of the range of experience she's got," said J. Alfred Broaddus, a former president of the Federal Reserve Bank of Richmond who debated Yellen over the Fed's mandates during the 1990s. "She has experience that almost nobody else can bring to the table at this point."

Among Yellen's tasks, if confirmed, will be to execute the unwinding of the Fed's record monetary stimulus. Bernanke has said the central bank won't end monthly bond purchases until the labor market shows sign of substantial improvement.

The Fed has also announced plans to hold short-term interest rates near zero until the unemployment rate reaches at least 6.5 percent.

San Francisco

A member of the Fed's board of governors and chairman of the White House Council of Economic Advisers during the Clinton administration, Yellen later was president of the Federal Reserve Bank of San Francisco before Obama nominated her to the No. 2 job at the Fed in 2010.

As Fed vice chairman, Yellen's attentiveness to the district Fed presidents proved invaluable in building consensus on policy issues.

When the Federal Open Market Committee gathers in Washington for monetary policy decisions, Yellen often has breakfast with one district bank president, then sits down with another, before the meeting starts in the morning, her appointment calendars show. That familiarity with her colleagues would probably make her an adept manager of the central bank, said Robert Eisenbeis, a former Atlanta Fed research director.

"She's steeped in the culture," said Eisenbeis, now chief monetary economist at Cumberland Advisors in Sarasota, Florida. "Nobody understands the culture from the many perspectives that she's had."

Inflation Goal

She took control of a subcommittee focused on the Fed's communication challenges. For years, policy makers on the FOMC had been unable to agree to holding press conferences or spelling out goals for inflation and unemployment.

Yellen's subcommittee met almost as often as the FOMC -- 15 times in person and via telephone in 2011 and 2012 -- according to her calendars. The meetings culminated in a breakthrough in policy: A January 2012 statement that committed the central bank to achieving inflation of 2 percent in the longer term and spelled out a goal of 5.2 percent to 6 percent for the unemployment rate.

Yellen earned her Ph.D. in economics at Yale University in New Haven, Connecticut, studying under future Nobel laureates James Tobin and Joseph Stiglitz. She graduated in 1971 and became an assistant professor at Harvard University in Cambridge, Massachusetts.

Her road to the top of the central bank began in 1976 after she failed to get tenure at Harvard. She moved to Washington and took a job as a staff economist in the Fed's division of international affairs.

London, Berkeley

There she met her husband, George Akerlof, and together they went to the London School of Economics and then the University of California at Berkeley.

They specialized in the labor market and were co-authors of more than a dozen papers that delved into the mechanics of how people switch jobs and what it means when workers perceive their wages as unfair.

In 1994, Yellen and Akerlof's career paths diverged. While he went on to win the Nobel Prize in Economics, Yellen was appointed by President Bill Clinton to the Fed's board of governors.

She served as the chairman of Clinton's Council of Economic Advisers from 1997 to 1999, a period of economic boom when the unemployment rate was under 5 percent, the U.S. was running budget surpluses and Yellen was making speeches on a strategy to use the savings to help shore up Social Security.

Yellen returned to Berkeley in 1999, leaving again in 2004 to become president of the San Francisco Fed.

Broad Credentials

"She assures continuity on the one hand and on the other hand is exquisitely qualified," said Nathan Sheets, chief international economist at Citigroup Inc. in New York, who previously served as the top international economist at the Fed. "I don't know if there's ever been a Federal Reserve chairman with a broader set of credentials."

When Yellen became vice chairman of the Fed in 2010, she passed the Senate Banking Committee with a vote of 17-6, providing a preview of what her confirmation process could look like. There are 12 Democrats and 10 Republicans on the Banking Committee.

Senator Bob Corker, one of the top Republicans on the banking committee, said Yellen's record will come under scrutiny.

'Dovish' Views

"I voted against Vice Chairman Yellen's original nomination to the Fed in 2010 because of her dovish views on monetary policy," Corker, of Tennessee, said in a statement today. "We will closely examine her record since that time, but I am not aware of anything that demonstrates her views have changed."

Yellen became San Francisco Fed president in June 2004, well before house prices collapsed. Home prices were rising at an annual pace of more than 15 percent from May 2004 to December 2005, according to the Case-Shiller (SPCS20Y%) index of home prices in 20 cities.

Transcripts from meetings of the central bank in 2007, not released until earlier this year, show that Yellen was among the first Fed policy makers to warn how severe the housing situation was becoming.

At the May 2007 FOMC meeting, Yellen expressed concern that the Fed staff's forecast was too optimistic on home prices. The forecast "assumes that national house prices are flat going forward," she said. "I am worried that they may actually fall."

At the next meeting, on June 27-28, Yellen said the biggest risk to economic growth was housing, which she called the "600-pound gorilla in the room."

"The risk for further significant deterioration in the housing market, with house prices falling and mortgage delinquencies rising further, causes me appreciable angst," Yellen said.

"Rising defaults in subprime could spread to other sectors of the mortgage market and could trigger a vicious cycle."

[runawayjimbo]

Why is the global financial system so fucked? Try following this "map" which illustrates the evolution of credit markets and the crises inherent in a system that relies on ever increasing leverage and systemic interdependence.

More readable version here

[sls.stormyrider]

I think just looking at that map for 3 seconds provides the answer

[sophist]

short answer: greedy assholes

[runawayjimbo]

short answer: greedy assholes

Meh. Greed is inescapable (although the culture of Wall St is most certainly one that rewards the greediest). I think the answer lies more in people believing they can beat the system through their own "genius".

[runawayjimbo]

So, Michael Lewis has a new book out, Flash Boys, about the scourge that is High Frequency Trading and how it has distorted equity markets. I haven't read it yet, but I am really looking forward to it. If you read The Big Short or Liar's Poker (and if you haven't read either of those, I recommend you do) you know how good Lewis is at making technical concepts easy to understand, which is good, because explaining HFT is pretty goddamned technical.

Anyway, he has been making the rounds, so here's a couple of interviews with him and the protagonist (Brad Katsuyama) that give a great primer on HFT.

60 Minutes

Daily Show Part 1

Daily Show Part 2

Daily Show Part 3 (my favorite as they get into what regulation can and cannot do and why IEX is providing a true market-based solution to the problem)

Also, Lewis and Katsuyama were on CNBC yesterday with the president of the BATS exchange and an unabashed HFT proponent. It was one of the most entertaining/dooshchilling exchanges I've ever seen on financial news.

[runawayjimbo]

Michael Lewis on how the Fed takes its marching orders from Goldman. But please, tell me again about the Fed's independence.

http://bv.ms/1xp8WBe

The Secret Goldman Sachs Tapes

Probably most people would agree that the people paid by the U.S. government to regulate Wall Street have had their difficulties. Most people would probably also agree on two reasons those difficulties seem only to be growing: an ever-more complex financial system that regulators must have explained to them by the financiers who create it, and the ever-more common practice among regulators of leaving their government jobs for much higher paying jobs at the very banks they were once meant to regulate. Wall Street's regulators are people who are paid by Wall Street to accept Wall Street's explanations of itself, and who have little ability to defend themselves from those explanations.

Our financial regulatory system is obviously dysfunctional. But because the subject is so tedious, and the details so complicated, the public doesn't pay it much attention.

That may very well change today, for today -- Friday, Sept. 26 --- the radio program "This American Life" will air a jaw-dropping story about Wall Street regulation, and the public will have no trouble at all understanding it.

The reporter, Jake Bernstein, has obtained 47½ hours of tape recordings, made secretly by a Federal Reserve employee, of conversations within the Fed, and between the Fed and Goldman Sachs. The Ray Rice video for the financial sector has arrived.

First, a bit of background -- which you might get equally well from today's broadcast. After the 2008 financial crisis, the New York Fed, now the chief U.S. bank regulator, commissioned a study of itself. This study, which the Fed also intended to keep to itself, set out to understand why the Fed hadn't spotted the insane and destructive behavior inside the big banks, and stopped it before it got out of control. The "discussion draft" of the Fed's internal study, led by a Columbia Business School professor and former banker named David Beim, was sent to the Fed on Aug. 18, 2009.

It's an extraordinary document. There is not space here to do it justice, but the gist is this: The Fed failed to regulate the banks because it did not encourage its employees to ask questions, to speak their minds or to point out problems.

Just the opposite: The Fed encourages its employees to keep their heads down, to obey their managers and to appease the banks. That is, bank regulators failed to do their jobs properly not because they lacked the tools but because they were discouraged from using them.

The report quotes Fed employees saying things like, "until I know what my boss thinks I don't want to tell you," and "no one feels individually accountable for financial crisis mistakes because management is through consensus." Beim was himself surprised that what he thought was going to be an investigation of financial failure was actually a story of cultural failure.

Any Fed manager who read the Beim report, and who wanted to fix his institution, or merely cover his ass, would instantly have set out to hire strong-willed, independent-minded people who were willing to speak their minds, and set them loose on our financial sector. The Fed does not appear to have done this, at least not intentionally. But in late 2011, as those managers staffed up to take on the greater bank regulatory role given to them by the Dodd-Frank legislation, they hired a bunch of new people and one of them was a strong-willed, independent-minded woman named Carmen Segarra.

I've never met Segarra, but she comes across on the broadcast as a likable combination of good-humored and principled. "This American Life" also interviewed people who had worked with her, before she arrived at the Fed, who describe her as smart and occasionally blunt, but never unprofessional. She is obviously bright and inquisitive: speaks four languages, holds degrees from Harvard, Cornell and Columbia. She is also obviously knowledgeable: Before going to work at the Fed, she worked directly, and successfully, for the legal and compliance departments of big banks. She went to work for the Fed after the financial crisis, she says, only because she thought she had the ability to help the Fed to fix the system.

In early 2012, Segarra was assigned to regulate Goldman Sachs, and so was installed inside Goldman. (The people who regulate banks for the Fed are physically stationed inside the banks.)

The job right from the start seems to have been different from what she had imagined: In meetings, Fed employees would defer to the Goldman people; if one of the Goldman people said something revealing or even alarming, the other Fed employees in the meeting would either ignore or downplay it. For instance, in one meeting a Goldman employee expressed the view that "once clients are wealthy enough certain consumer laws don't apply to them." After that meeting, Segarra turned to a fellow Fed regulator and said how surprised she was by that statement -- to which the regulator replied, "You didn't hear that."

This sort of thing occurred often enough -- Fed regulators denying what had been said in meetings, Fed managers asking her to alter minutes of meetings after the fact -- that Segarra decided she needed to record what actually had been said. So she went to the Spy Store and bought a tiny tape recorder, then began to record her meetings at Goldman Sachs, until she was fired.

(How Segarra got herself fired by the Fed is interesting. In 2012, Goldman was rebuked by a Delaware judge for its behavior during a corporate acquisition. Goldman had advised one energy company, El Paso Corp., as it sold itself to another energy company, Kinder Morgan, in which Goldman actually owned a $4 billion stake, and a Goldman banker had a big personal investment. The incident forced the Fed to ask Goldman to see its conflict of interest policy. It turned out that Goldman had no conflict of interest policy -- but when Segarra insisted on saying as much in her report, her bosses tried to get her to change her report. Under pressure, she finally agreed to change the language in her report, but she couldn't resist telling her boss that she wouldn't be changing her mind. Shortly after that encounter, she was fired.)

I don't want to spoil the revelations of "This American Life": It's far better to hear the actual sounds on the radio, as so much of the meaning of the piece is in the tones of the voices -- and, especially, in the breathtaking wussiness of the people at the Fed charged with regulating Goldman Sachs. But once you have listened to it -- as when you were faced with the newly unignorable truth of what actually happened to that NFL running back's fiancee in that elevator -- consider the following:

1. You sort of knew that the regulators were more or less controlled by the banks. Now you know.

2. The only reason you know is that one woman, Carmen Segarra, has been brave enough to fight the system. She has paid a great price to inform us all of the obvious. She has lost her job, undermined her career, and will no doubt also endure a lifetime of lawsuits and slander.

So what are you going to do about it? At this moment the Fed is probably telling itself that, like the financial crisis, this, too, will blow over. It shouldn't.

[runawayjimbo]

Cool chart, bruh

[jedifunk]

not sure how to read this chart ... seems to say that the US is a consumer economy that produces nothing and buys 23% of the rest of the worlds goods

[jedifunk]

also, how is india with all those billions of people only 3%?

[PIE-GUY]

also, how is india with all those billions of people only 3%?

If the chart is based on the US Dollar, then India is 3% because of the strong Dollar. Services in the US are exponentially more expensive in the US than services in India.

[runawayjimbo]

not sure how to read this chart ... seems to say that the US is a consumer economy that produces nothing and buys 23% of the rest of the worlds goods

I think the biggest thing is that it's GDP, so there's more to it than just consumption. Y = C + I + G + (X − M). Now, you're right, Consumption (C) usually is the biggest for sure, but the other components are increasingly becoming more important in our low growth world. US probably dwarfs most of the world in Investment (I) and gov't spending (G) and countries who are net importers - exports (X) - imports (M) - like India (and the US to a far lesser extent) also see a drag on their total contribution to global GDP. Also, just because the US is a service economy doesn't mean we don't produce wealth. And that fuels C and I, furthering our contribution to the total. Finally, as PG said, there's probably some FX effect attributable to a strong dollar which is a drag on developing economies and shrinks the relative size of countries like Brazil and India (and Rest of World for that matter). The flip side of that is that a weaker currency in emerging economies helps them boost their exports because their goods become cheaper in places like the US, so their GDP is increased due to an increase in X - M. Hard to say how much that interaction offsets each other, but I'd guess it probably is a net drag on weaker currencies resulting in some shrinkage.

Here's the full description of the chart (although there's not a whole lot of detail)

http://howmuch.net/articles/one-diagram-that-will-change-the-way-you-look-at-the-us-economy

One Diagram That Will Change the Way You Look At the US Economy

The US is by far the largest economy in the World, with a nominal GDP of $17.4 trillion in 2014. However, it is not the World leader in all economic sectors: the US is a service-based economy, with a smaller focus on agriculture and industry than other countries (though its industrial and agricultural sectors are still the second- and third-largest in the World due to the sheer size of the US economy).

The graphic above (Voroni diagram) represents the relative size of each country's economy in terms of nominal GDP: the larger the area, the larger the size of the economy. The areas are further divided into three sectors: services, industrial, and agricultural. The US economy is mostly composed of companies engaged in providing services (79.7% compared to the global average of 63.6%), while agriculture and industry make up smaller-than-average of portions of the economy (1.12% and 19.1% compared to averages of 5.9% and 30.5%).

The next largest economy, China, is roughly balanced between industry and services (though the service sector is growing at a faster rate), with a 9.1% contribution from agriculture. In this sense, China is a bit of an anomaly: other rich countries have service sectors that greatly outweigh both industry and agriculture. Over the past several decades, China has leveraged its competitive advantage and designed industrial policies to incent manufacturing in the country. But as China grows, it will continue to transition to a service-based economy. Similarly, India will see a decrease in agriculture's contribution to its GDP and an increase in the size of the service sector.

Over time, the service sectors of developed nations have tended to grow relative to the other sectors. But are there limits to this trend? What is the natural size of each sector?

[jedifunk]

very well written response jimbo!

its less that i don't understand indias position, as much as i wasn't 100% sure what this chart was showing me ... no context really... thanks for the full article!

[sls.stormyrider]

the other thing about India, is that even though to some degree their economy is booming, there is a MUCH higher percentage of extremely, extremely poor there. The contrasts are striking.
(yes, the inequality here is disgusting and getting worse, but India is another story entirely)

[runawayjimbo]

Federal Reserve Bank of Minneapolis named a replacement for its President today. To absolutely no one's surprise, he is a former Goldmanite. For those keeping score, that makes 4 out of 12 Fed Presidents to come from Goldman. Shocker, I know.

PS - he was also the guy who oversaw TARP and said, "No, it's cool, AIG, you can take the $150B we gave you and use $500M for bonuses. NBD."

http://www.wsj.com/articles/neel-kashkari-to-be-named-new-minneapolis-fed-president-1447170684?mod=djemCentralBanksAlertPro&alg=y

Neel Kashkari to be Named New Minneapolis Fed President
Ex-TARP chief brings experience as an engineer, banker, government official and politician to the position

The Federal Reserve Bank of Minneapolis has named former banker, government official and unsuccessful California gubernatorial candidate Neel Kashkari to become its new president and chief executive officer.

He'll succeed Narayana Kocherlakota, who leaves office at the end of the year. Mr. Kashkari, 42, is slated to take office on Jan. 1, 2016, the bank plans to announce Tuesday.

Mr. Kashkari's views on central bank interest-rate policy are not publicly known. He's not an economist, beginning his career as an aerospace engineer working on space missions before earning an M.B.A. at the University of Pennsylvania's Wharton School. He's an alumni of investment bank Goldman Sachs and investment fund Pacific Investment Management Co., or Pimco.

Mr. Kashkari rose to public prominence as a member of President George W. Bush's administration by running the government's $700 billion Troubled Asset Relief Program—a controversial effort aimed at stabilizing the financial system by pumping capital into banks during the 2008 financial crisis. Critics called the program an improper intrusion by the government into private enterprise and an unfair bailout of big banks.

The U.S. Treasury has recovered $442.04 billion from the TARP rescues, after disbursing $430.06 billion—making a profit. The effort injected taxpayer funds into 707 financial institutions; all but 19 of which have paid the money back.

Mr. Kashkari—taking a job that paid $339,000 a year, according to the Fed's most recent annual report—said in an interview with the Wall Street Journal that his diverse resume provides a critical foundation for his new role. He also offered broad praise for how the Fed has conducted policy, even as he declined to offer his views about the monetary policy outlook.

The Fed's regional banks "can be and should be some of the most important economic policy thought leaders in the country," Mr. Kashkari said in the interview. He sees his new job as "a continuation of a lot of the policy work I've already done" in government and the private sector. He said he also sees the regional Fed banks as an antidote to the "group-think" that can take hold of Washington-based policy makers.

In his new job, Mr. Kashkari will participate in meetings of the Federal Reserve's policy committee, though he will not be a voting member next year. The voting seats rotate annually among 11 of the 12 regional banks and Minneapolis's president will next gain one in 2017. The announcement comes at a time when the central bank is considering raising short-term interest rates from near zero, where they have been for seven years.

He also will oversee the Minneapolis Fed's 1,100 employees, who conduct economic research and supervise financial institutions, among other things.

In the interview, Mr. Kashkari offered broad praise for how the Fed has conducted monetary policy.

"I think the Fed is doing the right things with the levers the Fed can control," he said. He added he was not surprised that inflation is currently as low as it is, given that there remain signs of underlying softness in the job market.

While he declined to say anything about when the Fed should raise rates, he countered critics of the central bank's policy by saying "the Fed had hasn't caused inflation, hasn't devalued the dollar."

"Right now, everyone is laser focused on when is the Fed going to raise interest rates and start the normalization process, for good reason. But there are a whole host of economic challenges we face as a country, and I want to pay attention to all of that," Mr. Kashkari said.

Mr. Kashkari worked for the Treasury Department in 2006 as a senior advisor before becoming an assistant secretary between 2008 and 2009. After leaving the administration, Mr. Kashkari worked as a money manager for Pimco between 2009 and 2013.

Mr. Kashkari said his experience had led him away from ideological views on complex problems and towards a pragmatic, inclusive and data-driven way of approaching policy issues.

Before the financial crisis, Mr. Kashkari described himself as a "free-market guy." But he added "I learned the limits of free markets in the intensity" of the 2008 financial crisis. "I still lean in that direction but I'm also more humble," believing "ideology is great, but data is better"

Pimco began a push into stocks in 2009 when it hired Mr. Kashkari to help turn the bond-fund company into a player in stock funds. But the performance of funds Mr. Kashkari launched was spotty. He left in 2013 and the firm has since closed some of its stock funds.

Mr. Kashkari left Pimco to run for governor of California in 2014. A political rookie and son of Indian immigrants, he won a Republican primary against an assemblyman, Tim Donnelly, a leader in the movement to stop illegal immigration.

During the campaign, he presented himself as a moderate focused on economics with centrist social views. He identified himself as a fiscal conservative, supported abortion rights and gay marriage and said he voted for President Barack Obama in 2008. He touted his ability to work with politicians regardless of party. He lost to incumbent Gov. Jerry Brown , a Democrat, garnering 40% of the vote.

"My entire agenda was economic opportunity. It was 100% focused on economic issues," which means there's "great continuity" between what he hoped to do in California and what he'll do at the Minneapolis Fed, Mr. Kashkari said.

An Ohio native, Mr. Kashkari moved to California in 1997. He's in the process of relocating to the Minneapolis area. He said he's a big fan of outdoor activities and a lifelong Michael Jackson enthusiast. Mr. Kashkari said he had two Newfoundland dogs named for players on the Cleveland Browns football team.

Mr. Kashkari worked at Goldman Sachs in San Francisco from 2002 to 2006 on technology financing issues. The presidents of the New York, Dallas and Philadelphia Fed banks— William C. Dudley, Robert Steven Kaplan and Patrick T. Harker, respectively—also worked for the firm. Mr. Kashkari's first job at Treasury was working as a senior advisor to then-Treasury Secretary Henry Paulson, the former chairman and CEO of Goldman.

Mr. Kashkari's political profile makes him an unusual selection for the central bank, which in recent years has seen only one other aspirant for elected office among its ranks. That was former Dallas Fed President Richard Fisher, who ran unsuccessfully for a U.S. Senate seat from Texas in 1993 as a Democrat. The Fed seeks to maintain independence from the political process so it can set interest rate policies for the economy free from partisan pressures.

Mr. Kashkari said, in some ways, his first job could be the most important to his new role as a central banker.

"Policy making is problem solving," he said. While he managed the TARP program, "the fact that I had went to Wharton and got my MBA and worked at Goldman are all fine, but I really relied on my engineering skills as a research engineer working on NASA missions," he said, because that experience was all about solving problems with limited tools.

He earned bachelor's and master's degrees in mechanical engineering from the University of Illinois at Urbana-Champaign.

Mr. Kashkari takes office at a time of transition at the regional Fed banks, after new presidents took office in Dallas and Philadelphia this year.

Regional Fed bank presidents are selected by their respective boards of directors, although representatives from the financial industry do not participate in the process.

In an unusual move for a process frequently criticized for too much secrecy, the Minneapolis Fed released the criteria it was seeking in a leader, and as part of the planned announcement of Mr. Kashkari's appointment, the bank also will offer a detailed timeline of the search. It will not reveal the names of other candidates.

Mr. Kashkari succeeds the Fed's most aggressive supporter of taking strong action to support the economy. Mr. Kocherlakota recently called for the Fed to lower its benchmark short-term interest rate target, which is now between zero and a quarter-percentage point.

Mr. Kocherlakota became Minneapolis Fed president in 2009 and announced in December 2014 that he would not seek reappointment.