WASHINGTON, District of Columbia (AFP) – It’s one of the most important decisions President Barack Obama says he will make over his eight-year presidency: who to lead the Federal Reserve after Ben Bernanke leaves in January.
With the U.S. economy still struggling to gain traction five years after the crash, and the global economy sagging, Obama left markets on edge Friday, saying he would only announce his nominee “in the fall”, suggesting around October.
But he confirmed that former Treasury secretary Larry Summers and veteran central banker Janet Yellen were on the White House shortlist, along with “a couple of other candidates.”
The choice has already turned into a fight, with Summers attracting criticism from both the left and the right over his record in government, Yellen branded as too soft on inflation, and Obama facing resistance from Republicans in Congress to any of his appointees.
But it has taken outsized importance, with the economy’s pace now heavily dependent on how the Fed manages its huge stimulus program and steers interest rates.
“It is definitely one of the most important economic decisions that I’ll make in the remainder of my presidency,” Obama told reporters last week.
“The Federal Reserve chairman is not just one of the most important economic policymakers in America, he or she is one of the most important policymakers in the world.”
Bernanke, 59, winds up a second four-year term as Fed chairman in January 2014, having led the body through the economic crisis to widespread praise.
The debate over his replacement has become uncommonly heated.
“It is the first time I can remember that the public and private discussions have been so open,” said Steve Pearlstein, economics writer for the Washington Post.
He called such debate a good thing in general, “particularly for an institution so steeped in a kind of ‘holy-of-holies’ secrecy such as the Fed has been.”
However, he said, “What is less attractive is that it has now turned into something more like a political campaign.”
Obama called both Yellen and Summers “highly qualified” for the job, which pays $199,700 a year — a fraction of what either could make working for a bank on Wall Street.
Both are considered by their peers in economics and finance as brilliant economists and solid organizational leaders.
Summers, 58, has been chief economist at the World Bank, Treasury secretary in the Clinton White House, the president of Harvard University, and in 2009-2010, Obama’s top economic advisor at the height of the economic crisis.
Yellen, 67, is a veteran of the Federal Reserve who has also served as a White House economic advisor under Bill Clinton, and an economics professor at both Harvard and Berkeley.