Politics, more than skill, may be the deciding factor in who gets to run the Federal Reserve should Chairman Ben Bernanke leave when his term expires in January. And on that note, the US Congress may find Janet Yellen preferable to Larry Summers. Setting aside the candidates' strengths or weaknesses, President Barack Obama needs to figure out who can actually pass muster with his cantankerous legislative body.
Though Bernanke could seek another term, should the president want to keep him around to unwind the massive multi-year trade he has put on since the financial crisis of 2008, the speculation game on his replacement is in full bloom. In theory, the next leader of the world's most influential central bank should be selected based on intellect, experience in monetary policy and markets and creativity in solving problems. But the White House must weigh political risk. Remember, after heroically snatching the economy from the clutches of a potential depression, Bernanke only mustered 70 out of 100 votes for his Senate confirmation in 2010- the weakest tally ever. A more controversial nominee could see 11 more nays and a filibuster.
That could hamper the candidacy of former National Economic Council Director Larry Summers, who faces skeptics on both sides of the aisle. Some liberal Democrats fear he puts bankers before struggling families. And Republicans have shown no desire to help the president with confirmations of any kind. He'd surely face an ugly committee hearing and fierce floor debate, at best followed by a razor-thin confirmation.
Current Fed Vice Chair Janet Yellen may represent an easier alternative. Though she may have a thinner resume than Summers, Democrats would have less reason to oppose her. Republicans would only have her perceived dovish stance on monetary policy to complain about. But the GOP uniting to block an eminently qualified first-female Fed chair nominee would create bad political optics for a party struggling to woo women voters and counter its caricature as a party of cranky old men.
Other possibilities like former Treasury Secretary Timothy Geithner or former Fed Vice Chair Roger Ferguson probably fall in between Summers and Yellen on the spectrum. They would also have opponents in both parties - including Democrats who perceive both as overly-tolerant of Wall Street shenanigans. But after tough hearings, they're probably confirmable. The good news: all of these candidates are well qualified.
