Among economists, Fed Vice-Chair Janet Yellen is seen as the most qualified and deserving of getting the top slot after Ben Bernanke retires.
But constant reports out of the White House keep suggesting that Larry Summers is the favourite.
It’s not surprising that Obama likes Summers, who has been a close, trusted advisor.
But why might they be uncomfortable with Yellen?
A primary reason, according to a report from Neil Irwin at Wonkblog, is that she’s not enough of a team player or suited to their accustomed decision-making style.
Sources “overwhelmingly spoke favourably of her intellect, diligence and approach to leadership,” but she apparently has an independent streak that runs counter to what the White House wants.
Irwin adds: “She is methodical, not manic. And the prevailing style of the White House insiders advising on the decision leans a bit more toward manic.”
There are a few parts to this feeling apparently. The first is that she doesn’t simply follow Bernanke, but challenges him.
“People dealing with her within the Fed have viewed her not so much as Bernanke’s emissary but as her own intellectual force within the organisation,” Irwin writes.
The second was that she wasn’t around during the most trying times when the Obama administration was battling the financial crisis, which created a close-knit team while Yellen was elsewhere (running the San Francisco Fed).
Finally, Obama seems really into the ideas of pricking and preventing bubbles, and therefore doesn’t think that the Fed should be leaning so hard into stimulating demand and improving employment through monetary policy.
So basically: Yellen is too methodological, independent, and is too interested in fixing the current employment problem, rather than pricking bubbles which haven’t even formed yet. Depressing.
Read the full report at Wonkblog
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