With Larry Summers dropping out of the Fed race, it now appears clear that Janet Yellen is the frontrunner to succeed Ben Bernanke.
According to WSJ, the White House is not inclined to start fresh with new names, and since Yellen was the #2, Summers’ departure makes her the #1. But it’s not a done deal until it’s over.
POLITICO’s Ben White — who deserves credit for identifying Summers as the favourite before just about any other reporter — says in today’s Morning Money that while Yellen is probably the frontrunner, one can’t discount the possibility of someone like Roger Ferguson, also a former Fed vice-chair, and the CEO of TIAA-Creff.
White cites one “well-connected” source who offers the following argument for Obama to pick Ferguson:
“He handled the Fed’s response to 9-11 adroitly and is a calm and analytical policy wonk. He knows the President and Valerie Jarrett well, but also gets along fine with Republicans on the Hill. And if he is the pick the President could let it be known that he won’t reward Elizabeth Warren for sabotaging the Summers pick by giving the appointment to Warren’s pal Yellen.”
This idea that The White House might not appoint Yellen over frustration with how the Summers nomination went down has been reported elsewhere.
Immediately after Summers withdrew, David Wessel at WSJ reported:
One leading candidate is Janet Yellen, the Fed’s current vice chairwoman, who has garnered substantial support among Democrats in Congress and among economists. But the public lobbying on her behalf appears to have annoyed the president, say administration insiders, and may lead him to look elsewhere.
Bottom line: Yellen is now the favourite according to reports. But if she doesn’t get it, it may be because the White House is angry at the way her supporters torpedoed his #1 pick.
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