WASHINGTON (Reuters) – The White House has assembled a short list of candidates to succeed Federal Reserve Chairman Ben Bernanke, a source familiar with the process said on Thursday, and U.S. Treasury Secretary Jack Lew is running the search.
Bernanke is expected to leave when his second term as head of the central bank ends on January 31, after an eventful eight years in helping the U.S. economy recover from the worst recession since the Great Depression.
President Barack Obama hinted in a television interview this month that Bernanke would step down, comparing him to longtime FBI Director Robert Mueller, who agreed to stay two years longer in the job than he had planned, and is now to leave.
Lew has assembled a short list with help from several senior White House officials, the source said, speaking on the condition of anonymity.
There was no information on who is on the list, although Fed Vice Chair Janet Yellen, former Obama adviser Lawrence Summers and former Treasury Secretary Timothy Geithner are considered to be likely leading choices.
“We decline to comment on speculation on any personnel matters until the president has made his decisions and is ready to announce them,” said Amy Brundage, a White House spokeswoman.
“The president believes that Chairman Bernanke is a vital and excellent partner in promoting our economic recovery and he continues to serve admirably and with distinction during this important time for our country,” she said.
BERNANKE SILENT; YELLEN SEEN IN THE LEAD
Bernanke has yet to say whether he would like to serve another four years at the helm of the central bank, but has done little to dampen speculation he is ready to leave.
The likely succession could come at a delicate juncture for U.S. monetary policy.
Bernanke said last week that the central bank expected to lighten up later this year on the amount of money it is pumping into the economy each month through a bond-buying program.
He said the Fed would likely draw that program to a full close around the middle of next year, when policymakers at the central bank expect the jobless rate will have fallen to around 7 per cent from its current 7.6 per cent.
Those comments spurred a big selloff in stock markets around the globe and sent the yield on the benchmark 10-year U.S. Treasury note soaring. It reached a 22-month high of 2.67 per cent on Monday.
Fed officials have mounted a concerted effort to convince markets they overreacted to the chairman’s remarks, and they have underscored the central bank’s commitment to keep overnight interest rate near zero until unemployment drops to at least 6.5 per cent. Stock markets have since stabilised and bond yields have fallen back.
The market volatility, however, underscored the tricky task the Fed faces in stepping away from the controversial and unprecedented easing of monetary policy Bernanke led.
To combat the deep recession and heal the scars from the financial crisis that followed the bursting of the U.S. housing bubble, the Fed pressed overnight rates to near zero, where they have been since December 2008. It also more than tripled its balance sheet to $3.4 trillion through a series of bond purchases.
The next chairman of the central bank will likely face the task of unwinding that monetary largesse.
In a Reuters poll of economists earlier this month, the vast majority said Obama was likely to tap Yellen to take over.
Yellen, who has served as Fed vice chair since October 2010, is considered a forceful advocate of aggressive action to lift unemployment. If nominated and confirmed by the Senate, she would be the first woman to lead the central bank.
(Reporting by Steve Holland; Writing by Douwe Miedema and Tim Ahmann; Editing by Lisa Shumaker)
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