Current Fed chair Ben Bernanke retires in January, and President Obama has to nominate someone to replace him soon. Unfortunately for Obama, since he's waited months to make an announcement, Democrats, economists, and pundits have found reasons to dislike all the potential candidates. No matter who Obama chooses now, he'll be making somebody unhappy.
Most agree that since former Treasury Secretary Larry Summers dropped out of the race, current Fed vice chair Janet Yellen is the clear frontrunner for the job. Women's groups love her (she'd be the first female Fed chair) and Senate Democrats went to bat with Obama over her. At least five Democrats on the Senate Banking Committee indicated that they would not support a Summers candidacy, and at least a third of Senate Democrats sent a letter to Obama in July asking him to nominate Yellen. Plus, 350 economists, including Obama's former Council of Economic Advisers head, Cristina Romer, wrote Obama last week urging him to pick Yellen. So that's what Obama should do, right?
Well, not necessarily. Capital Economics' chief U.S. economist Paul Ashworth wrote Sunday that Obama will look "weak" if he nominates Yellen now. He'd be "kowtowing to the Democrats who have been openly campaigning for her." The New York Times notes it will be awkward for Obama to "circle back" to Yellen, when it was pretty clear he didn't want to nominate her in the first place. And now, in the wake of Summers' dropout, anti-Yellen sentiment is growing. Zach Carter at The Huffington Post argues today that Yellen's record on deregulation in the 1990s isn't much better than Summers'.
Obama has only named one other possible candidate (besides Timothy Geithner, who's repeatedly said he's not interested). That's Donald Kohn, who used to hold Yellen's position of Fed vice chair. Australian economist Warwick McKibbin, who's worked with both Kohn and Yellen, said Monday that Kohn's a "better fit" for the Fed. Kohn's also apolitical, which might make it easier for him to be confirmed by Republicans and Democrats. Should Obama pick him?
No, probably not. Kohn was Alan Greenspan's righthand man during a lot of his time at the Fed, and many Democrats blame Greenspan for "an antiregulatory stance that encouraged financial excesses that led to crisis," the Times reports. Also, one of Kohn's own employers doesn't think Obama should pick him. Greg Valliere, an analyst at the Potomac Research Group, said Sunday that Obama has "virtually no option" but to nominate Yellen. Kohn is a senior strategist at PRG.
And of course, many progressive Democrats and women's groups would be angry if Obama misses the chance to nominate a woman — his record of promoting women in his administration hasn't been great.
So good luck to the president! The longer he waits to nominate someone, the more time everyone has to point out the candidates' flaws.