With the big news of Larry Summers's withdrawal from consideration for the next Fed Chair, his main rival for the spot, the highly-qualified current deputy fed chair Janet Yellen, should be a given right? Not so fast, says some of the instapunditry following Summers's surprise announcement. Minutes after the announcement, former Treasury Secretary Tim Geithner's name resurfaced as a candidate, even though Geithner has repeatedly said he's not interested in the job. That speculation is due in part because some think the president prefers to pick someone with whom he's worked closely, like Summers or Geithner. On Sunday, Geithner said again that he's not interested in the job, but the speculation itself is telling: While Yellen may be the leading candidate, she is not the administration's ideal choice.
As the Washington Post summarized this evening, there are a lot of good reasons to give Yellen the job (she's also the bookies' favorite, for the little that's worth). But here are some of the reasons being floated against her:
There's an alternate candidate: According to some previous digging on Yellen, back when this was a Yellen vs. Summers fight, it looked like the Obama administration, along with some Washington insiders, weren't terribly enthusiastic about Janet Yellen as fed chair, despite her sparkling qualifications. Their objections include her less "manic" demeanor, her independence, and her apparent lack of "gravitas." But with Summers gone, what option does the administration have left? Meet Donald L. Kohn, the only other candidate publicly named for the job by Obama. Kohn is currently a senior fellow at the Brookings Institution, and used to have Yellen's current job. And, apparently, he's Tim Geithner's choice.
Nominating Yellen would make Obama look "weak:" This comes from Capital Economics' Chief U.S.Economist Paul Ashworth, who wrote that a Yellen nod now would let the Democrats who opposed Obama on Summers win:
The Obama administration has shown little, if any, enthusiasm for Yellen ... so we're not convinced she will necessarily get the nod. Summers candidacy was sunk by the opposition of many Senate Democrats, which would have made it hard, if not impossible, to get his nomination confirmed. Nominating Yellen now could make Obama look weak, kowtowing to the Democrats who have been openly campaigning for her.
Politico echoed the weakness argument, writing that "the biggest question now is whether Obama acquiesces to Summers’s opponents and nominates Yellen or feels he has to pick someone else to look like he was not pushed into a corner." Putting aside whether an imagined sense of strength or weakness will factor that much into the fed chair decision, Summers's withdrawal is indeed being cheered by progressives, among others.
So, there you have it. Janet Yellen's lack of a "manic" personality, or "gravitas," might prompt the administration to coax Kohn out of the world of think tanks. Or, maybe, a sense of not wanting to let the pro-Yellen campaign win could have the same effect. But despite these somewhat ephemeral justifications for picking someone else, Yellen, for now, remains the favored candidate among economists, both on qualifications and probability. While Summers's surprise exit from the race has fed chair watchers scrambling to recalibrate where each candidate stands, one thing seems certain: the elimination of Obama's top choice for the job already has stock futures soaring.