Rosner and colleagues at BNP Paribas, including former Fed economist Julia Coronado, estimate that the yield on the 10-year Treasury note would rise about 50 basis points if Summers were nominated instead of Yellen.

A basis point is 0.01 percentage point. That would cause the firm to lower its forecast of gross domestic product growth over the next two years by 0.5 to 0.75 percentage point and would mean 350,000 to 500,000 fewer jobs, they wrote in a note published yesterday.

Economists’ Pick

As recently as an Aug. 9-13 Bloomberg survey of economists, Summers was seen as unlikely to be selected to lead the Fed. Twenty-five percent of economists said Summers would be President Barack Obama’s choice, compared with 65 percent for Yellen. Ten percent of the 63 economists in the survey thought Summers would be the best pick, compared with 53 percent for Yellen.

Fratto said Summers is an “impressive economist and can be a successful Fed chair.” At the same time, Fratto said, Summers may arouse opposition from members of both parties, with some Democrats viewing him as a proponent of financial deregulation.

When he was deputy Treasury secretary in 1998, Summers helped thwart an effort by Brooksley Born, then-chairman of the Commodity Futures Trading Commission, to consider regulating over-the-counter derivatives. That market ballooned to a notional value of almost $600 trillion in 2007 from about $28 trillion at the time of Born’s proposal. Largely unregulated trades of those contracts helped fuel the 2008 financial crisis.

Political Independence

Fratto is also trying to debunk the idea for clients that Republicans will easily vote for Summers. Many are concerned about his independence from the White House, he said.

If Republicans thought “Bernanke was carrying water for the White House, then what are they going to think of Summers?” said Fratto.

Bernanke’s confirmation for a second four-year term in 2010 prompted the most opposition of any nominee for the post in the 100-year history of the central bank. Twelve Democrats joined 18 Republicans in opposing Bernanke amid anger over the central bank’s role in bailing out large banks during the financial crisis.