Bombshell weekend news: Larry Summers
has withdrawn from considerationto be the next Fed Chair, citing a difficult Senate confirmation process.
So who could get it?
The favourite for sure is Janet Yellen. She’s the current Fed vice chairwoman, and a clear continuation of the current regime. She’s a brilliant economist, who is supported by the vast majority of academic economists. Over 400 top-names signed a letter on her behalf last week. She’s generally regarded as being “dovish” meaning more willing to tolerate inflation risk if it means getting unemployment back to normal, though throughout her career she’s been flexible and adaptive. If nominated, she would be the first woman to lead the Federal Reserve.
The other possibility that Obama has publicly floated, in addition to Yellen and Summers, is Donald Kohn. He was also a Fed vice chairman (through 2010) and would also likely be seen as a continuation of Bernanke. According to Charlie Gasparino, Kohn has received support from Tim Geithner, who has advised Obama during this process.
Speaking of Tim Geithner, Obama apparently wanted him, according to reports. The fact that Obama was so into Larry Summers, despite the opposition, is a strong sign that for the position the president was eager to have a trusted loyalist, and not bring in an outsider around whom he had less familiarity. Geithner fits the bill, but according to reports, he has resisted any overtures, and is happy in the private sector. Still, anything’s possible.
Another name that was discussed a lot early on was Roger Ferguson. Ferguson was previously chairman of TIAA-CREF and was the on the Fed from 1997-2006, service as vice chairman before Donald Kohn. As Matt O’Brien at The Atlantic has explained, he is highly qualified and would likely cut a Bernanke-esque policy path.
ULTRA WILD CARD: Former Bank of Israel chief Stanley Fischer. This is the monetary policy wonk’s dream because he’s basically been the professor to everyone these days who matters. Probably no chance it will happen.