Replacing Ben Bernanke Is A Delicate Task

Senate Democrats are asking President Obama to nominate Janet Yellen as the next Federal Reserve Chairman. A letter signed by more than 50 senators is being viewed as an attempt to derail the candidacy of former Treasury Secretary Larry Summers.

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ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel. Change is coming at the Federal Reserve. Chairman Ben Bernanke is expected to step down in January, and then the delicate task of ending the Fed's massive stimulus program will land in his successor's lap. The jockeying for that job has begun.

For months, Janet Yellen, the Fed's current vice chairman, has been viewed as the frontrunner, but in recent days a controversial candidate has reemerged, the former Treasury secretary Larry Summers. NPR's John Ydstie has our story.

JOHN YDSTIE, BYLINE: Janet Yellen, who had been the favorite to replace Bernanke, is not well known outside Washington, but Princeton economist Alan Blinder, himself a former vice chairman of the Fed, says she's eminently qualified.

ALAN BLINDER: Close to unprecedented in a Fed chairman. Even Ben Bernanke, who came in with very nice pre-chairman experience, didn't have a match for what Janet's resume shows.

YDSTIE: Yellen was a Fed governor in the 1990s and later chairman of President Clinton's Council of Economic Advisers. She ran the San Francisco Federal Reserve Bank just before and during the financial crisis, and Blinder says she excelled, recognizing the crisis earlier than most.

BLINDER: I think even a bit earlier than Ben Bernanke, that what was happening in the mortgage market was posing a grave peril to the economy.

YDSTIE: Blinder says Yellen also has a collaborative consensual style, much like the current Fed chairman. Despite Yellen's record, though, in the past week the blogosphere has crackled with news of the reemergence of Larry Summers as the leading candidate. The reason given is his relationship with President Obama and his White House economics team.

Jared Bernstein was a member of that team during Obama's first term.

JARED BERNSTEIN: It's certainly true that Larry has lots of allies in the White House, and probably more than Janet in the sense that Larry was a constant presence, of course, with the president ever since the campaign.

YDSTIE: Summers was President Obama's top economic advisor and headed the White House National Economic Council. Former Clinton Treasury Secretary Robert Rubin and Obama's former Treasury Secretary Timothy Geithner are reportedly urging the White House to nominate Summers.

But Summers is a controversial figure. Most recently, he was removed from his job as president of Harvard University, where he was accused of making sexist comments about women in math and science professions. Summers is also criticized by some Democratic lawmakers, including Iowa Senator Tom Harkin, for supporting deregulation of the financial services industry in the 1990s.

SENATOR TOM HARKIN: He was one of the architects of getting rid of the Glass-Steagall bill in the late '90s. He's actually worked to prevent the CFTC, the Commodity Futures Trading Commission, from regulating derivatives. Well, I think that's - both of those I think were just huge mistakes.

YDSTIE: Summers also has a reputation for arrogance and an unwillingness to work collegially with others. Senator Harkin has signed a letter to the president urging him to appoint Yellen. The letter's being circulated and has the signatures of about a third of the Democrats in the Senate. Whether or not Summers is the White House favorite, Jared Bernstein says he's sure President Obama did not want this fight to erupt in public just now.

BERNSTEIN: I can't imagine in a week where he's out there trying to get everyone focused on his economic policy that he wants to entertain a fight with Democratic senators over Summers versus Yellen.

YDSTIE: A senior White House official said today the president has not made a decision on who will lead the Fed and no decision is likely until the fall. John Ydstie, NPR News, Washington.

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