What are the most important qualifications and characteristics you look for in a candidate for the Federal Reserve Board of Governors?

Of course, we would like a Fed governor to be knowledgeable about macroeconomics and monetary policy. That is obvious. But perhaps even more important is that the person have good judgement. The Fed staff is outstanding, and a governor that can synthesize the information given by staff and generally be “data-driven” in their decision-making does not need a PhD in economics to do the job well.  

How much influence do individual governors have over monetary policy and the broader economy?

The Federal Reserve as a whole has enormous influence. Decisions by the Fed are taken by committee, so one committee member (even the chair) cannot do anything on their own.  But these committees are small, and a single vote is valuable. Also, any governor can make a lot of mischief with their public statements, since the market can never know for sure whether such communication is strategic signaling by the Fed. It is important to have good governors; it is sometimes even more important not to have “bad” ones.

 Does it become more important in the event of a financial crisis to have experienced regulators in these positions?

Certainly. The United States (and the rest of the world) was tremendously fortunate to have Ben Bernanke, Tim Geithner, and Don Kohn as key decisionmakers at the Federal Reserve during the global financial crisis. We did not have that same luck in the 1920s and 1930s, and it did not work out as well.