When former Treasury Secretary Lawrence Summers withdrew his name for consideration to be the next leader of the Federal Reserve, there was really only one person left in the race: current Vice Chair Janet Yellen. While others such as former Vice Chair Donald Kohn are reportedly in the running, Yellen, who previously served as president and CEO of the Federal Reserve Bank of San Francisco and as chair of President Bill Clinton’s Council of Economic Advisors, has been considered the crowd favorite.
“This is a complex moment in our national life,” Summers wrote in the letter he sent to President Barack Obama, announcing his decision to withdraw. “I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation’s ongoing economic recovery.”
The acrimony surrounding Summers’s candidacy has been tangible, and it has likely contributed to market tension as traders struggled to sort out what sort of policymaker would be sitting at the head of the world’s most important central bank in a few months.
As rumors circulated that Summers was Obama’s favored nominee, Democratic members of Congress, economists, and the public organized and pushed back. Several Democratic members of the Senate have come forward, publicly stating that they would oppose Summers’s nomination, while 350 economists signed a letter addressed to the president calling for Yellen’s nomination.
Ben Bernanke’s term as chairman of the Fed will expire in January, and although he has yet to confirm, it is widely expected that he will be stepping down. Packaged by all of the standard political touch-and-go, speculation about Yellen’s path to the chair has now really begun in earnest. Anonymous sources told Bloomberg that aides to the president have begun making calls to members of the Senate and have mentioned Yellen by name.
Perhaps most significantly, Charles Schumer (D-N.Y.) recently expressed his support for Yellen. Schumer is a senior member of the Senate Banking Committee, and he told the press he thinks Yellen would be an “excellent choice” to succeed Bernanke, according to Bloomberg.