A group of Democratic senators will send the White House a letter today calling for Federal Reserve Vice Chairman Janet Yellen to succeed Ben S. Bernanke as head of the U.S. central bank.
One-third of the 54-member Senate Democratic caucus has signed the letter, which praises Yellen and encourages the president to nominate her, according to three Senate aides who asked not to be identified discussing internal matters. While the letter doesn’t name any other candidate, former Treasury Secretary Lawrence Summers is another potential nominee.
Bernanke, whose second four-year term expires Jan. 31, hasn’t indicated whether he would seek or accept a third term. President Barack Obama said last month that the Fed chairman has stayed in the post “longer than he wanted.” White House officials have begun to focus on how Obama will leave his mark on the central bank.
The letter campaign, led by Senator Sherrod Brown of Ohio, demonstrates the support that Yellen is gaining for the nomination and the uphill struggle that Summers could face in winning Senate confirmation, if nominated.
Senators Jeff Merkley of Oregon and Tom Harkin of Iowa are among the other senators who’ve signed the letter. Brown said earlier this week he supported Yellen.
“She’s done well as part of the Fed in the last months and months,” Brown, a member of the Senate Banking Committee, said in an interview on July 23. “She really has been a cool, smart head. To mix metaphors here, she has her hand on the public pulse, I think, better than your traditional Fed governors or presidents, and I think that would matter.”
Yellen, the No. 2 Fed official since 2010, would be the central bank’s first female leader in its 100-year history. She was a University of California, Berkeley, economics professor who specialized in labor market research before serving as chairman of President Bill Clinton’s Council of Economic Advisers and president of the San Francisco Fed.
House Democratic Leader Nancy Pelosi said “it would be great to have a woman” to run the Fed. Yellen is “extremely talented,” the California congresswoman said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.
“I just don’t recall one party banding together like this,” said Nick Sargen, a former San Francisco Fed economist who oversees $45 billion as chief investment officer at Fort Washington Investment Advisors in Cincinnati. “The Fed in the past has fought for its independence and it wants to be viewed as not part of the political process, so you could argue that this is a movement towards more politicization of the Fed.”
Yellen, 66, has consistently backed the Fed’s accommodative monetary policy and led its unprecedented efforts to expand and overhaul its communications strategies. The Federal Open Market Committee is buying $85 billion in bonds each month and has kept the main interest rate near zero since December 2008 to spur growth and reduce unemployment that was 7.6 percent last month.
“I think Janet Yellen would be outstanding,” Senator Barbara Boxer, a California Democrat, said in an interview July 24. “I’ve known her for a long time. She has tremendous experience and the right temperament, and I think it would be great to have her.”
Bernanke said in a March 20 news conference that he’s “spoken to the president a bit” about it and feels no personal responsibility to remain in the job. He said he doesn’t see himself as the only one qualified to lead the Fed as it exits stimulus that’s pushed its balance sheet to a record $3.57 trillion.
A third of those surveyed in May said they expect Yellen to succeed Bernanke, while Summers was cited by 6 percent, according to the Bloomberg Global Poll of investors, analysts and traders. In an April poll of investors by International Strategy & Investment Group, 65 percent said Yellen was most likely to take over compared with 5 percent for Summers.
Summers, 58, served as Treasury secretary under Clinton and as Obama’s first National Economic Council director. As Treasury Secretary, Summers pushed for deregulation of the financial services industry.
His potential nomination has already drawn opposition from some lawmakers. Merkley, a Democratic member of the banking panel, posted a Twitter message on July 23: “Larry Summers for Fed Chair? Disconcerting... many questions to answer.”
New York Senator Chuck Schumer, the 100-member chamber’s third-ranking Democrat, and a member of the Senate Banking Committee, said he didn’t have a preference and wouldn’t “pre- judge” Obama’s potential picks.
Senator Ron Wyden, a Democrat from Oregon, and Mike Johanns, a Republican from Wisconsin, said they support Summers. “I know Dr. Summers better because I’ve dealt with him over the years,” Wyden said.
“I know Larry. He’s a really good guy, very very smart,” Johanns said. “So I guess what I’d say today without trying to handicap the support is that I’d be open to him.”
Summers, who served as president of Harvard University from 2001-2006, drew fire from women faculty and women’s groups after he said in a 2005 speech that “innate” differences between men and women could partially explain the shortage of elite female scientists.
Senator Elizabeth Warren, a Massachusetts Democrat and former Harvard Law School professor, said Summers and Yellen are both “very smart people.” Asked in Bloomberg TV interview whether Summers could be confirmed, she said: “I don’t know.”
Speculation about Summers for the position has been fueled, in part, by his previous interest in the job, as well as by Obama’s statements indicating that he doesn’t expect Bernanke to remain in the post.
Bernanke has stayed at the Fed “a lot longer than he wanted or he was supposed to,” Obama said in an interview with Charlie Rose broadcast on PBS on June 17. He praised Bernanke for having done an “outstanding job.”