Is Lawrence Summers the most qualified to succeed Fed’s Bernanke?
WASHINGTON -- With the Federal Reserve playing an over-sized role in the U.S. economy, Wall Street investors are keenly interested in who will be the central bank’s next chairman when Ben S. Bernanke’s term expires in January.
The Fed’s No. 2 official, Janet L. Yellen, long seen as Bernanke’s heir apparent, is considered the favorite to succeed him. But an even better-known economist could get the nod from President Obama:.
Despite a “deep bench” of candidates, Financial Times columnist Edward Luce is betting on Summers, a former Treasury secretary who served as Obama’s top economic aide from in 2009 and 2010.
“Any of the other contenders for Fed chairman, including Ms. Yellen, would make a good choice,” Luce wrote in a recent column. “But if Mr. Obama wants to fill the job solely on merit, Mr. Summers ought to have the edge.”
Summers, who also served as president of Harvard University, no doubt has the pedigree for the job. He’s widely hailed as a brilliant economist.
But Summers also is known for his prickly personality and has a reputation as difficult to work with. For those reasons, analysts have speculated he would have a tough time getting confirmed by the Senate and building consensus at the Fed.
In a Bloomberg News poll of international investors this month, 34% picked Yellen as the mostly likely choice for Fed chief in 2014. Coming in second at 27% was Bernanke, who has not indicated whether he would seek or accept a third term.
Former Treasury Secretary Timothy F. Geithner was next at just 6%. Summers followed him at 4%.
Luce, who was the chief speechwriter for Summers in 2000 when he was Treasury Secretary, argued that his former boss could overcome concerns about his personality.
“Since the Fed chairman’s job is to build consensus among sometimes fragile egos, Mr Summers’ abrasiveness would count fatally against him, critics argue,” Luce wrote. “Such worries are exaggerated.”
“Even if he has greatly mellowed in recent years, as his friends insist, charm is overrated,” he continued. “The most important quality is intellectual leadership – something Mr Summers would offer in greater abundance than the others.”
Bernanke has been coy about his future. Asked at a congressional hearing last week whether he would accept another term if Obama offered it, the Fed chief said, “I’m not prepared to answer that question now.”
Bernanke has been Fed chairman since Feb. 1, 2006. His second four-year term ends Jan. 31, 2014.
Yellen, the former head of the Federal Reserve Bank of San Francisco, has been a close ally of Bernanke’s and has strongly supported the central bank’s unprecedented stimulus efforts.
If chosen and confirmed, she would be the first woman to run the Fed. But she could face opposition from Senate Republicans because she’s viewed as even more supportive of Fed stimulus efforts than Bernanke.
Luce said Summers is viewed as neither a dove, like Yellen, or a hawk on monetary policy. Republicans would be unlikely to question his credentials, Luce said.
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