Larry Summers is out for next Fed Chair.
So who will replace Ben Bernanke?
Many think the momentum will now swing to current Fed Vice Chair Janet Yellen.
But back in July, former Fed Vice Chair Donald Kohn’s name was floated alongside Yellen’s.
Yellen remains the favourite, and is also slightly more well known, thanks to her standing among academics.
So we wanted to give you the low-down on Kohn.
- He has spent his entire career in the Federal Reserve system, starting out at Kansas City in 1970 and moving to Washington in 1975. He spent 14 years as the Fed’s director of the division of monetary affairs after being named to the position in 1987.
- James Kwak has written that Kohn was a proponent of the “Greenspan doctrine” that new financial instruments should be encouraged because they made institutions more “robust.”
- In a speech at Jackson Hole in 2005, responding to a now-prescient paper warning of the crisis from current Reserve Bank of India chief Raghuram Rajan, Kohn cited the repeal of Glass-Steagall as an example of successfully rolling back a regulation that stifled competition: “…at times rolling back regulation–for example, by lifting the Glass-Steagall restrictions on banking organisations–will benefit competition and help the financial sector deliver services more efficiently and effectively.”
- Yet during the crisis itself, as Fed Vice Chair, he became Ben Bernanke’s right-hand man, spearheading the Fed’s bank stress-test program to ensure banks were setting aside adequate capital.
- And when he stepped down in 2010, Bernanke gave him a huge shoutout: “I would like to express my deep appreciation for Don’s friendship and counsel during some very difficult times. He will be greatly missed.”
- As the Washington Post’s Neil Irwin has argued, as a George W. Bush appointee, Kohn would have smoother sailing through confirmation hearings than Yellen, whom Obama appointed to replace Kohn.
- Kohn turns 71 in November. It’s not unheard of to have someone with so many miles on their odometer serve in the position — Greenspan was 80 when he stepped down — but it’s something to keep in mind.
For more on the possible candidates, see here.
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