Will Summers or Yellen be next Federal Reserve chairman?

Summers has as much chance of being confirmed to head Fed by the Senate as a snow ball in hell. Conservatives will not support him because he is a Keynesian from Harvard. Liberals will not support him because of politically incorrect statements.
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Larry Summer
Janet Yellen
Fed Chairman

• Economics

Brookings - Oregon - US

BROOKINGS, Ore. - July 29, 2013 - PRLog -- President Obama appears to be leaning toward his former economic adviser Larry Summers as his pick for the next chairman of the Federal Reserve, but he's facing opposition from fellow Democrats worried about Summers's track record, according to the Washington Post. The White House is currently gauging the level of pushback over Summers, who some Democrats oppose for his role in undoing Wall Street regulation when he served as Treasury secretary late in the Clinton administration, the Washington Post's reported. Specifically, Summers received investment banking money to support the repeal of the Glass-Steagall Act, which had forced the separation of retail and investment banks following the mass bank failures of the 1930s.

A separate Wall Street Journal report said a number of Democratic senators were circulating a letter petitioning Obama to instead choose Fed Vice Chair Janet Yellen to replace incumbent Ben Bernanke, who is widely expected to step down when his term expires at the end of January.

As the President of Harvard University he told Cornel West, a black studies professor, that he needed to spend less time making rap records, less involvement in politics, and more time in academics. He lost $1.8 billion speculating on leveraged derivatives with the Harvard endowment funds. He is on record as writing papers stating global warming is not a major world problem, and unemployment insurance encourages people not to work. Labor unions have taken exception to some of his comments. Summers stated a shortage of women in certain disciplines, such as science, could be explained by innate differences in mathematical ability – a comment that infuriated women’s’ jujmg rights groups. He said quantitative easing has been ineffective, a comment which disappointed many Fed economists. 

“People dismissed Summers’ chances a month or two ago, but he’s increasingly viewed as the leading candidate today – and opinions on this, for reasons I don’t fully understand… have really hardened in the last 72 hours,” reports the Washington Post’s Ezra Klein. Several men on Wall Street who raised almost $1 billion for President Obama’s election strongly support Summers.

However, one-third of the 54-member Senate Democratic caucus signed a letter, which praises Yellen and encourages the president to nominate her, according to three Senate aides who asked not to be identified discussing internal matters. The letter campaign, led by Senator Sherrod Brown of Ohio, demonstrates the support that Yellen is gaining for the nomination and the uphill struggle that Summers may face in winning Senate confirmation, if nominated.

Senators Jeff Merkley of Oregon and Tom Harkin of Iowa are among the senators who have signed the letter. Sen. Dianne Feinstein (D., Calif.) said she had signed the letter, as did Sen. Angus King, an Independent from Maine, who described Ms. Yellen as an "excellent candidate'' with "a strong track record.'' Sen. Dick Durbin (D., Ill.), the assistant majority leader, also confirmed the existence of the letter and said he also had signed it. Senator Barbara Boxer and Congresswoman Nancy Pelosi, called Yellen “outstanding.”

President Obama is not expected to name chairman Ben Bernanke’s replacement until latter this fall. However, many political observers are stating the last thing the Obama administration wants is a long drawn out confirmation hearing during the expected political battle over an increase in the debt ceiling. It appears Janet Yellen is once again the odds on favorite to be the first woman head of the Federal Reserve. She is considered a dove, and is expected to support quantitative easing when unemployment is above acceptable thresholds. Many doubt Larry Summers will receive Senate confirmation, and would have difficulty obtaining a voting consensus with regional bank presidents if made the Fed chairman.

For more information on the Federal Reserve and the culture war see:


Source:Dr. Stephen Johnston, "Tea Party Culture War"
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Tags:Larry Summer, Janet Yellen, Fed Chairman
Industry:Economics, Finance
Location:Brookings - Oregon - United States
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