Bernake's Successor: Yellen or Summers?

**barbaro** · 03-08-2013, 03:24 AM

Well officially, Bernanke has not announced his resignation but it is highly likely he will not seek a another term as head of the Federal Reserve.

The 2 leading candidates are Larry Summers and Janet Yellen.

There has been a lot of lobbying for both and it seems there are more and more in the Senate opposed to Summers.

The long term appointment influence, obviously.

Below are some succinct articles highlighting the current supporters of both.

Larry Summers supported the de-regulation of the banks and was involved in repealing the Glass-Steagall Act.

An article to start off, by Ezra Klein:

As far as I can tell, there’s almost no one in the economics blogosphere who wants to see Larry Summers named as Ben Bernanke’s replacement. The bulk of opinion ranges from relative indifference between the two candidates (“as we know there’s no real daylight between Yellen and Summers“) to extremely strong anti-Summers opinions (“Larry Summers will destroy the economy“) — with much of the latter being driven by Summers’s record on financial regulation. Tyler Cowen is almost alone in holding up the pro-Summers end of the argument.

The result is that if you’re just reading the economics blogosphere, you’re getting a skewed picture. The dominant thinking seems to be, How could the White House possibly name this guy that nobody likes? The key thing to remember here is there are other zones of influence too, and some of the most important ones are much, much friendlier to Summers.

The world of economic and Wall Street heavyweights who’ve worked or fundraised at high levels in Democratic administrations tend to be very pro-Summers. That’s true inside the White House, where longtime Summers allies like Jason Furman and Gene Sperling are central to the process. But it’s also true outside the White House’s walls, where significant “formers” like Tim Geithner and Robert Rubin are strongly admiring of Summers. These people, by virtue of their experience and their relationships with the key decisionmakers, carry a lot of weight.

From what I can tell, opinions in the monetary-policy community proper are a bit more mixed than either the administration or the econo-sphere. In particular, there’s much more divergence among different candidates, with various people favoring dark horses like Alan Blinder or William Dudley.

That said, there’s an obvious lean towards Yellen in a Yellen-Summers race, as they feel she’s more experienced and knowledgeable about monetary policy. There is also an annoyance with the idea that because both candidates are worried about unemployment, both would pursue equivalent monetary-policy paths with equivalent skill. The trick for the Federal Reserve going forward, many contend, is managing the extremely tricky communications challenge as they begin to pull back — and Yellen, they note, has actually been leading the Fed’s communications committee, and so is deeply immersed in these questions and has been for some time.

As for the Federal Reserve proper, there’s not going to be some kind of poll of Fed staff. Bernanke will be (and probably already has been) consulted, and his opinion will hold great weight inside the White House. In terms of other Fed players, expect people who were close to Obama or the White House economics team and were subsequently sent to the Fed — like Dan Tarullo and Jeremy Stein — to be influential here. I don’t have good enough sourcing in this world to say confidently where they come down.

Congress is interesting. Hill progressives are quite skeptical of Summers — again, largely because of financial regulation — and have made their voices heard on that fact in recent days. That said, some surprising Republicans are on Summers’s side, including Richard Shelby, the GOP’s ranking member on the Senate Banking Committee — and the White House almost certainly believes it’ll be easier to keep progressives than attract Republicans. It’s a bit harder to say how Yellen would fare before Senate Republicans.

Then there’s the all-powerful “market.” Opinion here is more mixed, which means that your view of the market’s reaction to either candidate depends enormously on who you talk to. But one thing to note is that Democratic administrations often get much of their market information from market participants involved in Democratic politics. Some observers worry that this could be giving the White House a skewed view of the market’s feelings.

If the White House is gauging market reactions to Summers by asking Bob Rubin and Larry Fink and Roger Altman and Steve Rattner for their views — all of whom know and like Summers immensely — they’re going to walk away with a view of market opinion that’s different from the one they’ll get if they’re, say, polling the big macro hedge funds. But they don’t know those hedge funders quite as well, and they’re going to be careful calling any big investors they don’t know well because those investors might try and trade on any signals they glean about the selection process.

Of course, the information the president will weight most heavily is the information he gathers directly. Obama knows Summers well, and really likes him. Obama and Yellen have no relationship to speak of. That’s perhaps the most important zone of influence of all.

Looking back, I was overly pessimistic on Summers’s chances over the last few months because I was overweighting opinion in the econo-sphere and the monetary policy community and underweighting the importance of Summers’s allies and his experience in the White House.

It’s useful to remember that White Houses — particularly second-term ones — know who they know, and they tend to rely on testimony from sources they already trust. So don’t be fooled by the weight of opinion in the econ blogosphere. Even if you’re not hearing many strong cases for Summers, the White House is.

Senate Democrats have signed onto a letter urging President Barack Obama to appoint Janet Yellen to be Ben Bernanke's successor as chairman of the Federal Reserve, according to The Wall Street Journal.

Yellen currently serves as the vice chairman of the Federal Reserve Board of Governors.

The Journal reported it could not confirm the full list of senators who signed on, but the list appears to represent the more liberal wing of the Democratic caucus -- a third of the 54 seats they currently hold in the upper chamber.

"There's a lot of concern among a lot of Democrats about an appointment of Larry Summers to that long-term position as Fed chairman," Sen. Tom Harkin (D-IA), who signed the letter, told the Journal. "He was one of the architects of getting rid of Glass-Steagall, of getting rid of other regulations. There's real concern about his economic views not really being in line with Obama's views."

Sens. Dianne Feinstein (D-CA), Dick Durbin (D-IL) and Angus King (I-ME) are also confirmed to have signed the letter.

http://livewire.talkingpointsmemo.c...ama-saying-they

**sabang** · 03-08-2013, 11:13 AM

Bernanke's successor- Goldman's or Citi?

**raycarey** · 03-08-2013, 12:00 PM

summers is undoubtedly a bright guy, but he's been wrong about so many issues:

• He has consistently argued for privatization and deregulation of the financial sector;

• He oversaw the repeal of Glass-Steagall via the passage of the Gramm-Leach-Bliley Act;

• He approved the (previously illegal) merger between Citibank and Travelers;

• He oversaw (and indeed encouraged) concentration in the financial sector, thinking bulked up banks are a virtue. This led to the rise of the TBTF institutions (formerly known as mega-banks).

• He successfully fought Brooksley Born, then chair of the Commodity Futures Trading Commission, to rein in financial derivatives;

• He oversaw passage of the Commodity Futures Modernization Act of 2000, preventing ALL Federal regulation of derivatives; The CFMA also exempted derivatives from state insurance oversight and antigambling laws.

• Thanks to Summers, derivatives still have no minimum reserve requirements, no disclosure obligations, no transparency and no exchange listing / reporting requirements.

http://www.ritholtz.com/blog/2013/07...larry-summers/

the banksters have so much clout in washington, but i hope obama finds a way not to select summers.

i'm not sure how much better yellon would be, but i'm with BR on this.......anyone but summers.

**barbaro** · 03-08-2013, 09:34 PM

Ive been reading up on Larry Summers.

He has a bad track record. Stating that Africa was underpoluted, and advocating dumping toxic waste there. He 2 year economic plan for Lithuania was a failure.
Presidency of Harvard involved him doing corrupt things.

There has always been this talk of "how smart he is."

That seems to justify putting him into positions where he has failed time after time.

True the banksters own Washington, and it is Goldman or Citi, but I'd prefer Yellen also.

**barbaro** · 14-09-2013, 11:23 PM

I'd prefer Yellen.

The "he's so smart" numb-nutz, Larry Summers will be the next Fed Head.

Obama to nominate Summers as Fed chief - Japan's Nikkei

TOKYO | Fri Sep 13, 2013 7:24am BST

(Reuters) - U.S. President Barack Obama will name former Treasury Secretary Lawrence Summers as chairman of the Federal Reserve Board, Japan's Nikkei newspaper said on Friday.

The newspaper, quoting unnamed sources, said in its original Japanese version that Obama was "in the final stages" and moving toward naming Summers.

The English-language version said the president "is set to" name Summers as early as late next week.

Debate in Washington has focused on whether Obama will pick Summers or Fed Vice Chair Janet Yellen to succeed

Ben Bernanke, whose term as head of the U.S. central bank expires in January. The appointment must be approved by the Senate.

Reports in the New York Times and Washington Post earlier this month suggested Obama was strongly inclined to pick Summers.

Republican Senator Johnny Isakson on Tuesday expressed concerns about a Summers nomination but stopped short of saying he would oppose him.

A number of senators - mostly Democrats - have criticised Summers for easing banking restrictions and not regulating derivatives when he was treasury secretary in the 1990s during the presidency of Bill Clinton.

The Nikkei said the White House is expected to announce the decision as early as late next week, after the Fed's rate-setting committee meets on Tuesday and Wednesday.

http://uk.reuters.com/article/2013/0...98C05Z20130913

**david44** · 14-09-2013, 11:33 PM

Obviously worth top $$

Financial institutions including JP Morgan Chase, Citigroup, Goldman Sachs, Lehman Brothers and Merrill Lynch paid Summers for speaking appearances in 2008. Fees ranged from $45,000 for a Nov. 12 Merrill Lynch appearance to $135,000 for an April 16 visit to Goldman Sachs, according to his disclosure form.
That’s $135,000 paid by Goldman Sachs to Summers — for a one-day visit. And the payment was made at a time — in April, 2008 — when everyone assumed that the next President would either be Barack Obama or Hillary Clinton and that Larry Summers would therefore become exactly what he now is: the most influential financial official in the U.S. Government (and the $45,000 Merrill Lynch payment came 8 days after Obama’s election). Goldman would not be able to make a one-day $135,000 payment to Summers now that he is Obama’s top economics adviser, but doing so a few months beforehand was obviously something about which neither parties felt any compunction. It’s basically an advanced bribe. And it’s paying off in spades. And none of it seemed to bother Obama in the slightest when he first strongly considered naming Summers as Treasury Secretary and then named him his top economics adviser instead (thereby avoiding the need for Senate confirmation), knowing that Summers would exert great influence in determining who benefited from the government’s response to the financial crisis.

**barbaro** · 15-09-2013, 08:23 AM

^ "He's so smart." Pretty shitty track record. Was it Lithuania or Estonia for his "consultative fiasco?"

Either way, he sux. He's an academic.

**Mr Lick** · 15-09-2013, 09:02 AM

Failure/corruption within the financial sector is an asset to anyone's CV it appears.

One has only to look toward Christine Largarde who was finance minister during the collapse of the french economy not so long ago and has since been promoted to head the IMF, nominated quite scarily as the 'best person for the job' following the resignation of her predesessor, the credible and very upstanding Strauss-Khan

Largarde herself is now under investiagtion for corruption to the tune of hundreds of millions of euro's whilst in office in her home country. Nothing unusual there one might think given the self congratulatory back slaps dished out when making a few billion bucks at the expense of others, legally or otherwise.

Obama will do as he is told by the financial institutions as usual. He is after all small fry compared to those heavyweights.

**leemo** · 15-09-2013, 09:32 AM

Doesn't matter who succeeds Bernanke, the FED still pwns the USA.

**billy the kid** · 15-09-2013, 06:24 PM

Jamie Dimon will be disappointed.

**raycarey** · 15-09-2013, 06:56 PM

^ great. all the more reason to select yellen.

**barbaro** · 16-09-2013, 05:21 AM

Correction. Extra! Extra! Read all about it!

Summer withdraws name from any cosideration / nomination.

Cashing out: Hounded by criticism, Larry Summers calls off Fed chairman bid

Credit: Feng Li / Getty Images file

By Daniel Arkin, Staff Writer, NBC News

Former U.S. Treasury Secretary Larry Summers has withdrawn his bid for consideration to succeed Ben Bernanke as Federal Reserve chairman, a senior White House official has confirmed to CNBC — a move that allows the administration to sidestep a potentially contentious confirmation process.

"I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation's ongoing economic recovery," Summers said in a letter to President Obama.

Obama has accepted Summers' decision. He said in a statement that the former Harvard University president was "a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today."

Summers, who was chairman of Obama's National Economic Council early in his first term and is widely seen as one of the White House's leading financial gurus, had been touted as the president's first choice for the Fed job. He had previously served as Treasury secretary under President Clinton.

However, many liberals, as well as three key Senate Banking Committee Democrats, have been vocally opposed to Summers' nomination, citing alleged failures of financial regulation that they charge sent the economy spiraling into crisis.

Entire: Cashing out: Hounded by criticism, Larry Summers calls off Fed chairman bid - U.S. News

**Butterfly** · 16-09-2013, 01:00 PM

Obama almost fucked up again,

is there anyway to stop that idiot for making more mistakes ?

**david44** · 16-09-2013, 01:07 PM

There's talk amongst the movers and shakers POTUS don't want Yellen and one or even Geithner may be in the frame.The serious press has views with words too long for us.

**david44** · 16-09-2013, 01:08 PM

Summers has now bowed out

**raycarey** · 16-09-2013, 03:41 PM

^ it was a numbers issue: he didn't have the votes on either side of the aisle.

there's a significant difference between being the smartest guy in the room and being competent.

this is a fact that has FINALLY caught up with summers.

**The Big Fella** · 16-09-2013, 04:18 PM

Does it really matter who gets voted in ? No matter which one gets the job you suckers are just going to continue to get stiffed and the really sad thing is you just let them get away with it and have done for the last one hundred years.
You have to hand it to them they have taken a simple scam / con and made it into an institution

**raycarey** · 16-09-2013, 06:19 PM

Originally Posted by The Big Fella

No matter which one gets the job you suckers are just going to continue to get stiffed and the really sad thing is you just let them get away with it and have done for the last one hundred years.

how wonderful it must be for you to be on the outside looking in and not be affected by the US federal reserve or any of the other central banks.

**Butterfly** · 17-09-2013, 08:43 AM

I think Bernake should stay, but he is tired of the petty politics within the Fed itself and the large Financial Institutions pressure games

**The Big Fella** · 17-09-2013, 01:58 PM

Originally Posted by raycarey

Originally Posted by The Big Fella

No matter which one gets the job you suckers are just going to continue to get stiffed and the really sad thing is you just let them get away with it and have done for the last one hundred years.

how wonderful it must be for you to be on the outside looking in and not be affected by the US federal reserve or any of the other central banks.

Sadly the Rothschild central banking system has nearly encompassed every country. The countries that refused it and after diplomatic channels were exhausted were simply invaded and then given one. With of course a huge national debt as well. In the year two thousand there were just seven countries without it.
Afghanistan
Iraq
Sudan
Libya
Cuba
North Korea
Iran
Those with half a brain may have noticed a pattern in the above countries ?
Today there are only three left
Cuba
North Korea
Iran
How long will it be before there are none ?
The thing that gets me about the Fed is why do the people simply just put up with a private company allowed to print their money, charge you interest, pay no tax on the profits and refuse to be audited and yet simply get away with this ?
Don't get me wrong. The bank of England is just as bad and the people just as pathetic.
The trouble is very few people actually understand just how banks work. If they did they would be revolution everywhere.
Fractional reserve banking is legalised theft.
I did actually think the people might say something when the fed refused to let them audit Fort Knox.
My guess is it is because it is empty.
It ain't Federal
And there is no Reserve

**barbaro** · 18-09-2013, 10:09 PM

As for one Fed Policy, QE, not many seem to know what it is. No surprise, though.

Poll: With the end of Fed's QE in sight, U.S. public says 'Huh?'

By Ann Saphir

SAN FRANCISCO (Reuters) - The Federal Reserve this week is expected to start winding down an epic economic stimulus that is credited with helping the United States claw back from the deepest slump since the Great Depression.

The Fed's $2.8 trillion "quantitative easing" program has, among other things, lifted stock prices to record highs, driven interest rates to record lows and put a floor under what had been a reeling housing market.

Yet barely a quarter of Americans even know what it is.

A poll leading up to the Fed's pivotal decision, expected Wednesday afternoon, found just 27 percent of U.S. adults could correctly pick the correct definition of quantitative easing from among five possible answers.

Entire: Yahoo News Canada - Latest News & Headlines

**The Big Fella** · 19-09-2013, 04:53 PM

The fed today announced it will continue to Buy America's debt to the tune of 85 BILLION Dollars a month.
As said what the vast majority of Americans fail to understand is that the Fed isn't buying anything. It is printing an extra 85 BILLION Dollars and slipping into the economy to give the impression it is on the way up.
IT ISN'T
Soon, unless there is a big surge in the economy which is unlikely then the whole thing is going to go tits up on a scale never before seen.
The debt being run up is incomprehensible to most people due to the huge sums involved. If the vast majority of Americans understood just what wa happening there would be a civil war.
A good job the nasty Al Qaeda is keeping everyone busy.

**billy the kid** · 19-09-2013, 05:42 PM

that 'no vote' in the House of Commons has upset a few plans.
In the UK, the Post Office in the public purse for 300 yrs. has been put on the market.
It had profits of £400 million last yr.
So chances are ,,no war no tapering for the Fed and lots more austerity for UK.

**barbaro** · 20-09-2013, 05:25 AM

Originally Posted by The Big Fella

The fed today announced it will continue to Buy America's debt to the tune of 85 BILLION Dollars a month.
As said what the vast majority of Americans fail to understand is that the Fed isn't buying anything. It is printing an extra 85 BILLION Dollars and slipping into the economy to give the impression it is on the way up.
IT ISN'T

Yes. Just 2 days ago I was listening to the radio and they were announcing that the Fed was tapering off QE.

Then, an about-face. Not a reduction of the QE but just keeping in going foll-bore.

Soon, unless there is a big surge in the economy which is unlikely then the whole thing is going to go tits up on a scale never before seen.

It is quite possible.

The debt being run up is incomprehensible to most people due to the huge sums involved. If the vast majority of Americans understood just what wa happening there would be a civil war.

The masses don't know.

A good job the nasty Al Qaeda is keeping everyone busy.

Yup. Al-Qaeda, Sryria, Navy Yard and.....let's see what's next tomorrow.

**sabang** · 20-09-2013, 11:32 AM

Will there ever be a Fed Chairman who is not Jewish?

Anyway, Yellen is a woman (but not as we know it), and is not ex-CitiGold, so her pending appointment still has PC stamped all over it.
Gotta say Ben Bernanke pulled a nice con job on the rest of the world- he's got the US printing out dollars like no tomorrow, yet still able to borrow at a negative real interest rates. And pass those savings, plus some, to the banks. Not given to praising the fed, but I think he's done a decent job overall. Yellen is the logical successor, Larry Sommers is old school tainted goods- an architect of the GFC, ex-CitiGold. Of course she represents a continuation of the exact same fed policy, so her pending appointment is quite comfortable with the financial markets. The last thing they want is an independent fed chair who would move toward lending money to banks at actual market rates.

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