updated 5/28/2008 4:40:12 PM ET 2008-05-28T20:40:12

Federal Reserve Governor Frederic Mishkin will leave at the end of August and return to teaching at Columbia University, the central bank announced Wednesday. His departure means yet another empty seat on the Fed as it battles housing, credit and financial debacles.

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Mishkin, a Fed board member since Sept. 5, 2006, submitted his resignation to President Bush. His exit leaves the Fed with just four of its seven board seats filled.

“Rick’s contributions to the intellectual underpinnings of monetary policy at the Federal Reserve have been invaluable,” said Fed Chairman Ben Bernanke. “His keen insights, deep analysis and humor have enriched our deliberations.”

Mishkin, 57, will return to Columbia University’s Graduate School of Business as a professor of economics and resume teaching in the fall, the Fed said.

The Fed’s meeting on Aug. 5 will be Mishkin’s last.

An author of more than 15 books, Mishkin’s academic research has focused on how monetary policy affects financial markets and the economy at large.

“It has been a great privilege to serve my country in this capacity,” Mishkin wrote in his resignation letter to the president.

His departure comes as the Fed has been working urgently to help the economy recover from the blows of the housing slump, a painful credit crunch and market turmoil.

The Fed, beginning last September, has carried out its most aggressive rate-cutting campaign in two decades to brace the wobbly economy. It also has taken a number of unconventional steps to help banks and investment houses overcome credit problems and help ease stresses in financial markets. One controversial move was the Fed’s financial role in backing JP Morgan’s takeover of investment house Bear Stearns, which teetered on the brink of bankruptcy in mid March.

President Bush has nominated two bankers to the two Fed board seats currently open, but the Senate hasn’t moved forward on confirmation proceedings. The Senate also hasn’t moved on Bush’s nomination of Fed Governor Randall Kroszner to a new term. Kroszner’s term has expired, although he is allowed to continue serving until a replacement is sworn in.

Bush chose Bernanke to be Fed chief and appointed all the current members on the Fed’s board. That has allowed the president to put his imprint on the institution. The Fed sets interest rate policy and is responsible for the safety and soundness of the nation’s financial system.

Sen. Chris Dodd, D-Conn., chairman of the Banking Committee whose panel oversees Fed nominations, said Mishkin’s tenure at the Fed “was during one of the most critical and important economic periods of the nation’s history, and I am very grateful and appreciative for his service.”

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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