How Long Will Fed Chief Bernanke Lead Federal Reserve?

Ben Bernanke has been Federal Reserve chairman for some of the most tumultuous years in the Fed's 100-year history. His second, four-year term expires in January. Steve Inskeep talks to David Wessel of The Wall Street Journal about who might succeed Bernanke, and what challenges the new Fed chief might face.

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STEVE INSKEEP, HOST:

President Obama's administration has left many top jobs unfilled. As we've reported on this program, the administration has been slow to find candidates, and Senate Republicans have resisted confirming many of them. But there's one top job so vital it is hard to imagine leaving it open. The second term of Ben Bernanke expires in January. The chairman of the Federal Reserve led the Feds through the financial crisis and oversaw massive interventions in the nation's economy. The White House is already looking for replacements, so the Senate will have some time to consider President Obama's nominee once it's announced - once he's announced or she is announced.

David Wessel wrote a book on the Fed. He's economics editor of The Wall Street Journal.

David, welcome back to the program.

DAVID WESSEL: Good morning, Steve.

INSKEEP: Could Bernanke's replacement be Bernanke - just appoint him again?

WESSEL: Well, legally, yes. His predecessor, Alan Greenspan, held the job for nearly 19 years. But Mr. Bernanke has given no indication that he wants another term -eight years is enough - especially, given what he's been through, so there's already lots of speculation, as you suggest, in the press, the markets, even inside the Fed itself - about whom is on President Obam's shortlist.

INSKEEP: Well, let me just ask about one thing, David Wessel. We focus on personalities in the media, they are easy to grasp; we can personalize the Fed through Ben Bernanke, but it's an institution. Does it really matter who succeeds him?

WESSEL: Well, you're right. It's a big institution. There are seven Fed governors in Washington. There's the president of the 12 regional Federal Reserve banks. The Fed has close to 300 Ph.D. economists, and that's just in Washington alone. It's definitely not a one person show. But history - recent history in particular - suggests that the chairman has an extraordinary amount of influence, probably more than, say, the chief justice does at the Supreme Court. And especially when there are hard calls to make - and there have been a lot of those in the last few years - the chairman voice is much louder than any others. So the answer to your question is yes, it does really matter.

INSKEEP: And then let's remember, this is a guy whose job is set up so that he can be free of political influence. Maybe he's not totally free of political influence in reality, but he is an independent figure.

WESSEL: Right. He doesn't have to go to Congress to get permission to do things. And he doesn't need Congress's approval to spend money or to print a lot of it.

INSKEEP: So how will the job be different for Bernanke's successor than it was for Ben Bernanke these last several years?

WESSEL: Well, I think the biggest difference is that he spent most of his tenure pushing on the Fed's gas pedal, cutting interest rates, putting a lot of money into the economy. And his successor will almost surely have to do the opposite - move off the gas pedal to the brake. And that'll probably come sometime in the four-year term in the next chairman.

INSKEEP: Hmm. And is it very obvious who the person pressing on the brake might be?

WESSEL: It's not very obvious, but there are the insiders, Janet Yellen, the vice chairman, Bill Dudley at the New York Fed. Their alumni like Roger Ferguson and Don Kohn, both of whom are past vice chairman. And there the former Treasury Secretaries, Larry Summers, now back at Harvard; Tim Geithner, who was at the New York Fed before he became a Treasury Secretary. They're all on the list.

INSKEEP: And who's the favorite?

WESSEL: Well, we at The Wall Street Journal did a poll of economic forecasters, and we found that 75 percent of them expect Mr. Obama to pick Janet Yellen. She's a meticulous economist who talks a lot about the pain of unemployment. She's been at various posts at the Fed in Washington and in San Francisco for 12 of the past 19 years. So she's who the markets and the press and the politicians expect to be chosen. But Larry Summers and Tim Geithner are both closer to the White House inner circle, and the White House isn't saying much - in fact, they're saying very little - about the selection process. So although she's the favorite, a lot of that is based on people on the outside looking in.

INSKEEP: Janet Yellen, a woman at the Fed, that would be just below a woman as president, I would think, in terms of the impact.

WESSEL: Well, it certainly would be a real change and one of those milestones that President Obama sometimes likes to make. And she has the virtue of being eminently qualified. She has a Ph.D. from Yale. She was a protege of Jim Tobin, the former advisor to Kennedy and Johnson, so that's a real possibility.

INSKEEP: OK. David Wessel of The Wall Street Journal.

WESSEL: Thank you.

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