President Bush is nominating Randy Kroszner and Kevin Warsh to fill two vacant seats on the

Federal Reserve's

board of governors, White House press secretary Scott McClellan said at a briefing Friday.

Kroszner is a professor of economics at the University of Chicago's graduate school of business. He was previously a member of the president's Council of Economic Advisers.

Warsh is a special assistant to President Bush for economic policy at the White House. He previously served as executive director and vice president of mergers and acquisitions in the investment banking division of

Morgan Stanley

(MWD)

.

The seats Kroszner and Warsh were nominated to take were formerly held by Edward Gramlich, who resigned last year, and Ben Bernanke, who had left the board to become chairman of the Council of Economic Advisers.

Bernanke, however, is returning to the Fed in just a few days, this time as chairman, replacing the retiring Alan Greenspan.

Nominees to the seven-member board of governors must be confirmed by the Senate. The full term of a governor runs for 14 years. Appointments are staggered in that one term ends on Jan. 31 of each even-numbered year.

A governor who serves a full term can't be reappointed, but one who was appointed to finish an unexpired term may be renamed to the seat for a complete 14-year stay.

Members of the board of governors also serve on the Federal Open Market Committee, the Fed's policymaking arm. No two governors may come from the same Fed district, of which there are 12.