Federal Reserve Chairman Ben Bernanke ducked questions last Wednesday about his desire to stay at the helm of the US central bank once his term ends, after suggestions from the White House that he might be ready to go.
President Barack Obama earlier hinted in a television interview that Bernanke would step down when his second term expires on January 31. The chairman brushed aside several invitations during a news conference to clarify his position.
“We just spent two days working on monetary policy issues, and I would like to keep the... questions here on policy. I don’t have anything for you on my personal plans,” he said.
Obama, in the public television interview, compared Bernanke to longtime FBI Director Robert Mueller, who agreed to stay two years longer in the job than he had planned and is to leave in the coming months. If history is any guide, Obama will pick a candidate to succeed the former Princeton University professor during the summer, allowing ample time for the Senate to consider the nominee before a final confirming vote.)
Here is a quick look at the likely leading choices:
Yellen, 66, has been Fed vice-chair since 2010 and is viewed as a strong contender to be the next Fed chair. A Reuters poll on June 12 found that an overwhelming majority of economists predicted she would get the job.
Yellen has been a forceful advocate of the aggressive steps taken under Bernanke to spur US economic growth, earning her a reputation as a policy “dove” who would tolerate a bit more inflation to drive down unemployment that she deemed too high. If picked to succeed Bernanke, she would become the 100-year-old central bank’s first female chief.
Before her current post, Yellen was president of the Federal Reserve Bank of San Francisco. She was chairman of the White House Council of Economics Advisers under President Bill Clinton and a Fed Board governor in Washington from 1994 to 1997.
A former professor at the University of California, Berkeley, Yellen has high standing among other academics. She began her career as an assistant professor at Harvard University in the early 1970s before shifting over to the Fed.
Summers, 58, is a Harvard economist who was Obama’s first National Economic Council director, a post within the president’s inner circle. He also was Clinton’s Treasury secretary after holding other senior posts in the department.
Viewed as brilliant but prickly, Summers was a full Harvard professor by the age of 28 and later became president of the university. But his nomination might be controversial, in large part because of his reputation for rubbing people the wrong way.
In a notable episode in 2005, he was heavily criticised for suggesting there were fewer women than men in science and engineering because of a lack of aptitude. Many saw the remarks as sexist; Summers said he was trying to stimulate debate.
That said, his expertise, professional accomplishments and his service to Obama are likely to earn him serious consideration for the top Fed post.
Since leaving the Obama White House in 2010, Summers has returned to teaching at Harvard, joined the boards of several private companies and become a part-time special adviser to venture capital firm Andreessen Horowitz. He also worked for hedge fund D.E. Shaw from 2006 until November 2008, when Obama picked him to run the National Economic Council.
Geithner, 51, was Obama’s first-term Treasury secretary. He is also seen as a possible contender for the Fed nomination, but has said he does not want the job.
If Geithner could be persuaded to change his mind, his track record is compelling. Before he was tapped for Treasury, he was already at the centre of the nation’s emergency response to the financial crisis as head of the New York Fed.
He also held senior posts in the Clinton Treasury and at the IMF, and has longstanding contacts with the nation’s largest banks. However, some critics view those ties to Wall Street as an impediment and say he was not tough enough on the banks, which contributed to excessive risk-taking that ultimately led to the 2007-2009 housing crisis.
Geithner had a difficult Senate confirmation as Treasury secretary in 2009 after it surfaced that he had failed to pay some taxes, and that issue might re-emerge if he is tapped for the Fed. Some lawmakers called for Geithner’s resignation early in his tenure at Treasury, but many Republicans later warmed to him, seeing him as an honest broker during tough budget talks.
Geithner is currently writing a book.
Ferguson, 61, is the CEO of TIAA-CREF, which manages retirement funds for many US schools and hospitals. A Harvard-educated economist and lawyer who was Fed vice-chairman from 1999 to 2006, Ferguson was regarded within the Fed as a very smart and thorough policymaker. His appointment would be historical: He would be the first African-American to chair the US central bank.
Kohn, who retired as Fed vice-chair in 2010 after 40 years at the central bank, is a respected economist who would be viewed as a safe nominee if he could be persuaded to return to public office.
Before taking a Fed board seat, Kohn, 70, was a top staff lieutenant to then chairman Alan Greenspan. He is now an external member of the Bank of England’s Financial Policy Committee, which sets broad guidelines for the British financial system, and a senior fellow at the Brookings Institution, a Washington think-tank.
Summers makes a point
A recovery in the housing market and strong growth in consumer wealth will help jump-start the US economy later in 2013, said Larry Summers, a former adviser to President Barack Obama.
Summers, considered a possible candidate to replace Federal Reserve Chairman Ben Bernanke when his current term ends next year, said a further boost would come from an increase in US energy production. “There are no certainties, there are enormous risks and there are some substantial problems but... the American economy is coming back,” Summers said.
“Barring a major shock from abroad, US growth will move to the 3 per cent range by the end of the year and will accelerate from that because the housing sector, which is only 4 per cent of the economy but more than half of the business cycle, has turned decisively.”
The Fed projects US economic growth of 3-3.5 per cent in 2014. Obama had hinted last week that he may be looking for a new Fed chief, saying Bernanke has stayed a lot longer than the current chairman had originally planned.
When asked whether his various speeches recently were a form of lobbying for Bernanke’s job, Summers told Reuters: “Absolutely not. Absolutely not.” He declined to comment on whether he was interested in the post.
Housing prices have risen 10 per cent over the past year, partly as an excess of housing capacity has swung to a shortage, said Summers, director of the White House National Economic Council in 2009-2010 and treasury secretary under President Bill Clinton. He said consumer wealth was pushing historic highs as house prices and asset prices have risen.
US fiscal policy is also improving as steep government spending to boost the economy has slowed while tax income has grown, he said. At the same time, public sector employment will likely rise, in a reversal of the past few years.
Still, “there is no question that the US requires further fiscal adjustment”, Summers said. “If Congress takes no further action, according to conservative projections, the US debt-GDP ratio in 2015 will be lower than it is now in 2015 and in 2020, it will be lower than in 2015.”
Health care costs are estimated to be $1 trillion (Dh3.67 trillion) less over the next decade than was the case two years ago, in part due to Obama’s measures, he said.“So, the budget deficit situation is less serious,” he said.