The unprecedented frenzy surrounding Federal Reserve Chairman Ben S. Bernanke’s potential successor shows that Americans won’t let the central bank go back to its opaque and secretive ways.
The backlash that resulted from Bernanke’s bailouts during the financial crisis and his record expansion of the Fed’s balance sheet has pushed the central bank toward openness at the fastest pace in its 100-year history. His introduction of regular press conferences in 2011 is just one of his recent initiatives.
That scrutiny has persisted as the U.S. economy has struggled to gain momentum and led to an unparalleled public debate over the next chairman, according to Sarah Binder, a senior fellow at the Brookings Institution in Washington who researches the relationship between the Fed and Congress.
The central bank’s decision to adopt unconventional policies has “heightened consequences of what the Fed does and who leads it,” Binder said. Such action “has so much impact on the economy and people’s lives.”
Fed Vice Chairman Janet Yellen and Lawrence Summers, President Barack Obama’s former top economic adviser, have been the focus of an intensifying public contest for Bernanke’s job. House and Senate Democrats have penned letters to the White House voicing support for Yellen, 66, and Obama defended Summers, 58, to his party’s lawmakers on July 31 against a barrage of criticism. Obama also has mentioned former Fed Vice Chairman Donald Kohn, 70, as a candidate.
Middle-Class Americans
Yellen’s “institutional knowledge and working relationships with current board members would provide for a smooth transition at a time when financial markets and middle- class Americans are counting on” the Federal Open Market Committee to “demonstrate thoughtful and deliberate leadership,” a group of female House Democrats led by Maxine Waters of California, the ranking Democrat on the Financial Services Committee, said in a July 31 letter to Obama.
Obama said July 31 that Summers was being unfairly criticized and took the opportunity to praise the former director of his National Economic Council, who was by his side at the height of the financial crisis.
White House spokesman Jay Carney said people should “separate” Obama’s defense of Summers from speculation about whom the president will choose as the Fed chairman nominee.
While there have been many examples of senators lobbying “every president since George Washington” about appointments, Senate Historian Donald A. Ritchie said in an interview that he wasn’t aware of any such campaigns for Fed chief during the prior 14 confirmations.