Already rumors have begun to emerge of a changing of the guard at one of the most secretive institutions in the world. No, it is not more Vatican intrigue; it is a question of leadership at the Federal Reserve. Ben Bernanke's term as chairman of the Federal Reserve comes to end February 1, 2014. Having served eight years during an incredibly tumultuous time for the American and world economy there have been rumors that Bernanke has grown tired and wishes to step down.
Bernanke's term as chairmen has seen the financial crisis of 2008, the ensuing bail out of the financial sector, the controversial quantitative easing program, the on-going Euro zone crisis, and many other events along with the day to day operations of the Federal Reserve. Finding a successor to fill the void left by him will be an enormous task if he steps down. Here are several of the most likely candidates for Bernanke's successor.
1. Janet Yallen:
Janet Yallen is the current Vice Chair of the Federal Reserve's Board of Governors. She has an impressive resume, having received her PhD in Economics from Yale University. She has served as chairperson of President Clinton's Council of Economic Advisors from 1997 to 1999. In 2004, she became president and CEO of the Federal Reserve Bank of San Francisco. She was nominated and confirmed in 2010 to become vice-chairperson of the Federal Reserve.
Yallen is considered by many to be an inflationary "dove," meaning an economist who is more concerned about unemployment than inflation. Many speculate that this would mean that she would continue Bernanke's policies aimed at keeping interest rates low. However, she has made statements that many interpreted as her become more hawkish on inflation, stating, "it is conceivable that accommodative monetary policy could provide tinder for a buildup of leverage and excessive risk-taking in the financial system." She would be the first chairwoman in the history of the Federal Reserve.
2. Larry Summers:
Larry Summers is a titan within the economics profession. Receiving his PhD at Harvard University, he became one of the youngest tenured professors in the institution's history at 28. In addition to being an academic economist, Summers served as chief economist at the World Bank from 1991 to 1993. He left the World Bank for the Clinton administration and was prompted in 1995 to Deputy Treasury Secretary. In 1999, he became Secretary of the Treasury after Robert Rubin retired. He served as President of Harvard from 2001 to 2006. In 2009, he became the Director of the National Economics Council under Obama, a position he served in until 2010.
Although few doubt Summers' economics prowess, and his resume is among the most impressive of all the candidates, his interpersonal skills bring his nomination into doubt. Controversy seems to follow in his wake, whether it be causing a professor to leave Harvard, making a speech that many considered sexist, settling a professors lawsuit with school funds, accepting perks from Citigroup while working under the Obama administration and a host of other issues. But if Obama were willing to shepherd him through the nomination process, he would be a titan in the office on the level of Alan Greenspan from day one.
3. Alan Krueger:
Alan Krueger is the current chairperson of President Obama's Council of Economic Advisors. One of the most respected economists currently in the field, Krueger received his PhD from Harvard University. He was the chief economist for the Department of Labor from 1994 to 1995. His natural experiments on the effects of minimum wage increases made him famous within the economics profession.
Widely considered a jobs expert when nominated to be the Chairperson of Council of Economics Advisors, nominating Krueger would be a clear sign that the president wishes to continue an expansionary economic agenda. Krueger would be likely to continue in the footsteps of Bernanke in emphasizing that expansionary fiscal policy is key to the recovery and that the monetary policy alone will not work, which would place him in the crosshairs of Republicans up on Capitol Hill.
4. Ben Bernanke:
The final option is that Ben Bernanke stays on. Obama has been highly satisfied with Bernanke's performance thus far and the difficulty recent nominations, such as Chuck Hagel's turbulent road to Secretary of Defense, have seen in Congress may cause Obama to give Bernanke a hard sell. Bernanke's existing relationship with Congress would probably give him a smooth re-nomination and age wise he is only 59, a spring chicken compared to Greenspan, who stepped down at age 80. But if Bernanke is as insistent on leaving as rumors suggest it will fall on a new face to fill the void in his absence.