Just when the economy most needs the help of capable policymakers, America's central bank finds itself short-staffed.

The predicament: Where the Federal Reserve is supposed to have seven members on its board of governors, it now has five. A recently announced retirement, moreover, means that by late summer the number is set to drop to four.

Compared with things like the price of oil or subprime mortgages, this doesn't qualify as a crisis. But the Fed is the first line of defense against such threats – inflation and the financial fallout of house-price deflation.

The case of the missing governors may be larger than just the board's ability to perform its tasks at an important time. Since it stems from Senate inaction on nominees, it is possible that political tensions surrounding the central bank are growing.

"The logical thing to do is to fill these positions," says William Poole, former president of the Federal Reserve Bank of St. Louis. "It should not wait…. You could end up in a critical situation, where you ended up through resignation or illness with a board that only had two or three people."

Fed-watchers and people such as Mr. Poole, who have sat on the Fed's policymaking committee, say a fully staffed board serves two vital functions: It adds to the range of professional opinion around the Fed's voting table and it helps ensure that the board doesn't fall behind on administrative and regulatory duties.

"We need as much horsepower as we can get" on the board, says Kenneth Thomas, a Fed expert at the University of Pennsylvania's Wharton School. "This is taking a V-8 [engine] down to a V-6 and maybe even a V-4."

Are politics behind Fed vacancies?

The Fed's challenge reflects a confluence of politics and a weak economy. The coming presidential election may have inclined the Democratic-controlled Senate toward postponing action, in the hope that more slots will be filled by a president of their own party. America's economic woes make the Fed's job arguably more important and less clear-cut than it has been in years.

Inflation is front page news. The housing-induced slump has raised questions of whether the Fed should pay more heed to the price of assets, especially real estate, as it sets interest-rate policy. Turmoil at banks has prompted the Fed to take a string of unusual actions to stabilize financial markets – culminating in a controversial intervention and loan to prevent bankruptcy at investment firm Bear Stearns.

Some key players in the Senate, moreover, say the Fed needs to be more vigilant in its role as a bank supervisor and regulator. As they see it, weak oversight of bank-lending practices helped fuel a home-price boom and bust.

"It isn't just putting bodies there" on the Fed's board, Sen. Christopher Dodd, chairman of the Senate Banking Committee, said on the CNBC network recently. "The Fed didn't do its job, in my view, [on subprime lending]. So I'm not going to sit back and allow for 14-year appointments of people who don't seem to understand how important it is the Fed do its job."

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