Nobel Prize-winning economist Peter Diamond withdrew his name from consideration to become a Federal Reserve governor Monday, a fresh sign of how partisan gridlock in Washington has left many financial-regulatory agencies with empty leadership posts and little prospect of filling them soon.
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Mr. Diamond, a professor at the Massachusetts Institute of Technology, made the announcement in an opinion-page article in Monday's editions of the New York Times. He declined to comment. In the article, be blasted Republicans for calling him unqualified for the job.
"We should all worry about how distorted the confirmation process has become, and how little understanding of monetary policy there is among some of those responsible for its congressional oversight," Mr. Diamond wrote.
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Peter Diamond's nomination ran into resistance from GOP senators.
White House Press Secretary Jay Carney said Mr. Diamond would have brought extraordinary expertise to the Federal Reserve. "We are deeply disappointed that this candidate, who had initially seen bipartisan support, fell victim to partisan obstructionism at this important time for our economic recovery," Mr. Carney said in a statement.
Mr. Diamond's announcement was welcomed by his chief Republican critic, Sen. Richard Shelby (R., Ala.), who urged the White House to nominate a candidate "capable of garnering bipartisan support in the Senate."
"It would be my hope that the president will not seek to pack the Fed with those who will use the institution to finance his profligate spending and agenda," said Mr. Shelby, the top Republican on the Senate Banking Committee.
Some Republicans remained furious that their own candidates for Fed jobs were held up by Democrats during the Bush administration.
As the 2012 election campaign approaches, it could become even harder to fill a slew of open financial-regulatory jobs.
About a dozen senior positions spread across multiple agencies and departments lack permanent occupants. Among them are the post of insurance expert at the Financial Stability Oversight Council, director of a new Office of Financial Research and a leader for the new Consumer Financial Protection Bureau—three entities created by the Dodd-Frank financial regulatory overhaul.
The Office of the Comptroller of the Currency and the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, are both led by acting directors. And the administration hasn't named a successor for Sheila Bair, chairman of the Federal Deposit Insurance Corp., who will step down July 8.
The grueling confirmation process could make it harder for the White House to find new candidates. Mr. Diamond was picked by Mr. Obama in April 2010. Six months later, he won a Nobel Prize in economics for his research on labor markets.
Mr. Diamond, 71 years old, ran up against GOP resistance in the Senate, where lawmakers fielded a range of arguments against him, including the argument that he lacked monetary-policy experience.
Mr. Diamond shot back Monday that understanding the labor market is a central part of managing monetary policy.
The failure of Mr. Diamond's nomination leaves the Fed's board of governors two short of its full complement of seven members.
Write to Michael R. Crittenden at michael.crittenden@dowjones.com
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