The New York Times

Obama’s Choice for Fed Is a Nod to Smaller Banks

January 6, 2015
The New York Times: Binyamin Appelbaum

WASHINGTON — President Obama said on Tuesday that he would nominate Allan R. Landon, the former chief executive of one of the largest banks in Hawaii, to a seat on the Federal Reserve’s Board of Governors.

Mr. Landon’s selection comes after months of pressure by the community banking industry, which is regulated by the Fed and which has argued that the Fed’s seven-member board should include at least one person with relevant experience of that sector.

Mr. Landon, 65, began his career as a banking auditor in the Midwest before joining the management of a Tennessee bank and then moving to Hawaii, where he served as chief executive of Bank of Hawaii from 2004 to 2010. Since then he has helped to run an investment fund that specializes in community banks.

“Allan Landon has the proven experience, judgment and deep knowledge of the financial system to serve at the Federal Reserve during this important time for our economy,” Mr. Obama said in a statement announcing the choice.

The position requires Senate confirmation, a difficult prospect for any Obama administration nominee now that Republicans control a majority of seats in that chamber. But Mr. Landon may be helped by the broad bipartisan support for putting a community banker on the Fed board. Draft legislation reserving a board seat for such a candidate passed the House last year, and has attracted wide backing in the Senate.

Mr. Landon would become the first Fed governor with community banking experience since Elizabeth A. Duke left the board in 2013.

“He gives a new perspective to the Federal Reserve Board that I believe is missing,” said Camden R. Fine, president of the Independent Community Bankers of America, which is among the groups lobbying for the appointment of a community banker. “You really don’t have a boots-on-the-ground, Main Street, community banker perspective on the board right now. And we badly need that.”

As a Fed governor, Mr. Landon would most likely focus on banking and regulatory issues, but he also would have a regular vote on monetary policy.

His views on the Fed’s role in managing the economy are not known, but two people with knowledge of the Obama administration’s selection process said the White House had considered only nominees likely to support the Fed chairwoman, Janet L. Yellen, in her campaign to stimulate the economy.

Mr. Landon, a graduate of Iowa State University, worked for 18 years at Ernst & Young, auditing and advising community banks, before joining a Tennessee bank, First American, as chief financial officer in 1998. He took a job with Bank of Hawaii in 2000, becoming its president and chief executive four years later.

Bank of Hawaii is larger than a typical community bank, which is sometimes defined as an institution with less than $10 billion in assets. Under Mr. Landon’s leadership it grew by about a third, from $9.8 billion in assets to $12.7 billion, surviving the financial crisis without federal help and prospering afterward.

In 2012 Mr. Landon joined with a partner, Frank Reppenhagen, to create Community BanCapital, an investment fund focused on community banks.

Mr. Reppenhagen said Mr. Landon’s “thoughtful, unpretentious” style was illustrated by a trip the two men took to the small town of Quincy, Calif., to visit a bank in which they were considering an investment.

“Al and the chief executive jumped in the car to get lunch,” Mr. Reppenhagen said. “And the guy ended up driving around the town, showing him what’s going on, and then he drove him over to the community college and introduced him to his wife.”

The partners decided to go ahead with the deal.

Mr. Landon was photographed in Hawaiian shirts during his time in the islands, raising the prospect that he might become the first Fed official to fulfill a 2005 proposal by Ben S. Bernanke, then a Fed governor, that all Fed governors should wear Hawaiian shirts and Bermuda shorts.

But Mr. Landon now lives in Utah, and Mr. Reppenhagen said he hadn’t seen Mr. Landon wear the shirts since he returned to the mainland.

“I think it may be a little cold for that,” he said.

Also on Tuesday, the Fed named a new head for the group of staff economists that advise the board on monetary policy. The new head, Thomas Laubach, will assume the powerful position of director of the Fed’s monetary affairs division next week. He replaces William B. English, who will become a special adviser to the board.

Mr. Laubach is known for his work on economic models that predict, for example, the sustainable levels of interest rates and economic output. In a statement, the Fed cited his “extensive contributions to the board’s approach to forecasting and analyzing the U.S. economy.”

He joined the Fed in 1997 after earning a doctorate in economics from Princeton University.

Read the full article at The New York Times - Return to CBC News