On Thursday, the U.S. Senate expects to vote on whether to approve Ben Bernanke for a second term as chairman of the Federal Reserve. President Barack Obama strongly backs the Bush appointee, the architect of the Fed's dramatic trillion-dollar expansion in the wake of the financial crisis. But some members of Congress haven't been so supportive. A strange-bedfellows coalition of senators -- everyone from social democrat Bernie Sanders to archconservative Jim DeMint, with heavyweights Barbara Boxer and John McCain in between -- has said no to Ben. At last count, not enough senators had agreed to vote for Bernanke, raising the question: If not him, then who?
COMMENTS (6)
More...
With Bernanke's term rapidly drawing to a close and the U.S. economy still fragile, his supporters warn that failing to re-up the chairman would be a disaster. Treasury Secretary Timothy Geithner predicted Wall Street would "view [the failure to reconfirm] as a very troubling thing to the economy as a whole."
But plausible replacements do exist. Tim Duy, a University of Oregon economist and specialist on Fed policy, notes, "You're dragging old names out of the hat," predicting the White House would likely choose a familiar and safe candidate to avoid a long nomination battle and placate markets spooked by the Bernanke fracas.
Two economists often mentioned for the top Fed gig are members of the administration: Larry Summers, director of Obama's National Economic Council, and Christina Romer, chair of the Council of Economic Advisers (CEA). Romer is a scholar of the Great Depression, like Bernanke, and a longtime academic at the University of California, Berkeley. Summers, a former Harvard University president and treasury secretary, has guided the president's economic recovery plans.
The nomination of either seems remote. Summers, who was famously ousted by Harvard's faculty after musing that women are inferior at science, took a multimillion-dollar paycheck from the hedge fund D.E. Shaw before joining the administration, making him too tainted by Wall Street to put before a confirmation hearing, particularly with Congress on an anti-bank bent. Plus, many view Romer and Summers as too tied to the politics of the Oval Office at this time.
From the ivory tower, frontrunners include David Romer, the CEA chair's husband and a fellow Berkeley-ite, and Alan Blinder, a Princeton University academic and former Fed vice chair. Both are lauded economists with experience working in and advising Washington. Romer is a "new Keynesian" who has written extensively on the Fed and its ability to aid the economy -- including a paper, co-written with his wife, on how to pick a good Fed chair. (Both Romers say Bernanke was a perfect selection.) Blinder also writes extensively on central banking; Paul Krugman, the Nobel laureate and influential economic commentator for the New York Times, cited him in a recent column as a likely candidate. Romer and Blinder are considered the most probable appointments to the two open seats on the Fed board, and thus to the powerful Federal Open Market Committee, which sets the Fed's interest-rate policies.
SUBJECTS:
(6)
HIDE COMMENTS LOGIN OR REGISTER REPORT ABUSE