I didn't know Volcker had come out against a second stimulus (or did I?), but in November 08, I would've put Volcker in at Treasury because he is a) unconnected to this mess and b) highly respected and c) determined and d) not a fan of this 'modern economy' crap.I tend to think that Bernanke could be influenced by smart Gagnon-proposal seats on the board, so Dems who don't want to rattle the markets by axing Bernanke could go that rout to help the economy. Volcker at Treasury is a good idea... Except he's likely to tamp down on more spending.
I wouldn't put him in at the Fed because a) he's old and b) he's an inflation hawk, and we have plenty of those at the Fed. But a year's service at Treasury would work very nicely.
Since Bernanke would still be on the board if he did not get reappointed as Chairmen (a point I forgot), I would replace him with Janet Yellen, Koenig (I think - the KC guy) or my oddball choice, Christina Romer. She's suited to it by the simple fact that she's studied the Great Depression as much as Bernanke and he would be in there with her. She is notably a Democrat and not involved in this mess. (The O administration has been sending her out there to do the talking in place of Larry & Timmy lately because she isn't 'infamous' and that's worked well enough for me to think she should just change buildings.)
[After checking around] There are two vacancies on the board. If replacements have been queued up, I don't know who they are. But I'd make one Romer and the other Koenig from KC. And then I'd simultaneously appoint Romer as Chair. Bernanke, if not confirmed would stay on as Chair until a new Chair came in, and if he was absent, Kohn would become acting chair and Bernanke would remain on the Board.
['That would rebalance the board a bit.']
Re: Christina Romer -- my only issue w/ her is that although she's a student of the Great Depression, she's not a very perceptive student of the Great Depression. I read and reviewed some of her GD research, and was thoroughly underwhelmed...
Also, who wants to bet that Bernanke gets exactly 51 votes in the Senate?