But Yellen has two strikes against her. A vice chair has never been elevated to the top spot in the century that the Fed has been around. And there's a lot of talk, "gender-coded talk," as David Dayen puts it, about her not being tough enough, not willing to speak up enough, not being imperious enough, not being thick-skinned enough to handle the post.
Matt Yglesias at Slate's "Moneybox" favors Yellen. But he says there's no difference between her and Summers on monetary policy:
The one big difference between that's clear is that though both are Democrats, Summers is really tied in with the Democratic Party. He's served the last two presidents at high levels, and the Obama administration is staffed by lots of people he'd work with. You might see that as biasing Summers toward expansionary policy through 2016 since helping Hillary Clinton win the election is a way of helping personal friends and colleagues of Summers' continue running national economic policy. On the other hand, you might see Summers' closeness to the White House as biasing him toward tight monetary policy in order to prove his independence.Scott Sumner at The Money Illusion:
I’ve often argued that macroeconomists as a group caused the Great Recession. Obviously “macroeconomists” is a vague term, but there are real flesh and blood individuals on both the left and the right who failed to forcefully advocate monetary policies that would lead to an appropriate level of AD. Summers was one of the most important.Matt Phillips at Quartz:
Amazingly, there isn’t even any discussion of [former chair of the Council of Economic Advisers Christina] Romer.
We’d respectfully suggest that the lesson of Greenspan’s tenure—when the central bank became something of a personality cult—is that it is a dangerous thing for the Fed to be a one-man show, dominated by a single, dazzling intellect. That’s even more true when the intellect in question has been wrong on key questions related to one of the Fed’s key roles: Regulating Wall Street.Mark Thoma at Economist's View says he will be disappointed if Yellen doesn't get the job. "I am very concerned about Summer's disposition to be a de-regulator, especially after we see that the Federal Reserve, in its infinite wisdom, gave permission for investment banks to openly manipulate commodity markets." And also:
I want someone who is calm, not in the spotlight, and really has the ability to rebuild the Fed as an institution. Everything he says will be big news, and it will be him, him, him."Please sign our petition requesting that President Obama not appoint Larry Summers as Federal Reserve chair, and consider instead appointing a more qualified woman, such as Deputy Chair Janet Yellen.
More commentary on Summers can be read below the fold.
Mike Konczal at the Roosevelt Institute:
The commenters at The Money Illusion couldn’t find a single instance of Summers suggesting that monetary policy was too tight in the past five years. Summers was simply missing in action for the most important monetary policy debates of the past 30 years, while Yellen was leading them. [...]Bill McBride at Calculated Risk, who, like me, backed Janet Yellen for the head-of-the-Fed slot in 2009 when Bernanke got it instead, still favors her, in part because she made sense on housing:
It’s difficult to overstate how important the Federal Reserve is to financial regulation. Did you catch how the Federal Reserve needs to decide about the future of finance and physical commodities soon, with virtually no oversight or accountability? Even if you think Summers gets a bum rap for deregulation in the 1990s, you must believe that his suspicion of skepticism about finance—for instance, the reporting on his opposition on the Volcker Rule—is not what our real economy needs while Dodd-Frank is being implemented.
In August 2005, Raghuram Rajan, an economist at the University of Chicago’s Booth School of Business, predicted the financial crisis. And he did it at possibly the least friendly of venues: a conference of high-powered economists who had convened in part to honor Federal Reserve Chairman Alan Greenspan.Felix Salmon at Reuters:
Rajan presented a paper titled “Has Financial Innovation Made the World Riskier?” His answer, put simply, was “Yes.” He was dismissed by the assembled masters of the universe. “Misguided,” said Larry Summers. But Rajan was right.
[I]f Obama picks Summers, it won’t be on the merits; instead, it will be on the grounds that Obama likes Summers, and is in awe of his intelligence. (Summers is, to put it mildly, not good at charming those he considers to be his inferiors, but he’s surprisingly excellent at cultivating people with real power.)Sheila Bair, former chairwoman of the Federal Deposit Insurance Corporation:
What’s more, the move would be a calculated snub to bien pensant opinion. Never mind the utter shambles that Summers made of Harvard, or the way he treated Cornel West, or his tone-deaf speech about women’s aptitude, or the pollution memo, or the Shleifer affair, or the way he shut down Brooksley Born at the CFTC, or his role in repealing Glass-Steagall, or his generally toxic combination of ego and temper — so long as POTUS likes Larry, and/or so long as Summers is good at working key Obama advisors like Geithner, Lew, and Rubin, that’s all that matters.
Certainly, there is no better qualified candidate to fill Bernanke's shoes when he steps down in January. A noted economist, Yellen headed the Council of Economic Advisors for two years; led the San Francisco Federal Reserve Bank for six years; and has served ably as Bernanke's Vice Chairman since 2010. Unlike Larry Summers, Tim Geithner, and other Bob Rubin—minions frequently mentioned in the financial press as potential Bernanke successors—she was not part of the deregulatory cabal that got us into the 2008 financial crisis. In fact, she had a solid record as a bank regulator at the San Francisco Fed and was one of the few in the Fed system to sound the alarm on the risks of subprime mortgages in 2007.Noam Sheiber at The New Republic:
So why isn't she a shoo-in? The "whispering" campaign against her among industry types has been deafening. "Doesn't understand markets." Translation: She may not bail us out if we get into trouble again. "Not assertive enough." Translation: She won't stand up for us against the populists who want more regulation. "Lacks gravitas." Translation: She doesn't show up very often in the financial media. (Rest assured that if she were more vocal, they would accuse her of not being a "team player.")
Summers has been prescient at times while writing from the remove of academia or the op-ed page. But, as my colleague John Judis observes, he seems to have a weakness for elite conventional wisdom once he gets into positions of power. This was true during the 1990s, when he echoed some of Alan Greenspan’s arguments for shielding derivatives from the prying eyes of regulators. And, as I reported in my book on the Obama administration, it was true in late 2008, when Summers recognized the need for a much larger stimulus than most in Washington were calling for, but nonetheless pushed for a far smaller package than necessary because he didn’t want to be laughed out of the room by Obama’s political advisers. “People will think we don’t get it,” he told his colleague Christina Romer, the incoming head of the Council of Economic Advisers, who preferred to present Obama with a much bigger number. (In fairness, Summers later became an aggressive internal advocate for doing more to stimulate the economy.)