WASHINGTON ? President Barack Obama?s choice of a replacement for the Federal Reserve chairman, Ben Bernanke, is coming down to a battle between the California girls and the Rubin boys.
Possible Bernanke Fed successor Summers slammed by critics who claim he helped cause the financial crisis
President Barack Obama could be months away from announcing his pick to replace Ben Bernanke at the Federal Reserve, yet critics are already making an unusual public effort to stop one contender in the race ? former U.S. Treasury Secretary Lawrence Summers.
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Janet L. Yellen, the Fed?s vice chairwoman, is one of three female friends, all former or current professors at the University of California at Berkeley, who have broken into the male-dominated business of advising presidents on economic policy. Her career has been intertwined with those of Christina Romer, who led Obama?s Council of Economic Advisers at the beginning of his first term, and Laura D?Andrea Tyson, who held the same job under President Bill Clinton and later served as the director of the White House economic policy committee. But no woman has climbed to the very top of the hierarchy to serve as Fed chairwoman or Treasury secretary.
Yellen?s chief rival for Bernanke?s job, Lawrence H. Summers, is a member of a close-knit group of men, proteges of the former Treasury Secretary Robert Rubin, who have dominated economic policymaking in both the Clinton and the Obama administrations. Those men, including the former Treasury Secretary Timothy Geithner and Gene Sperling, the president?s chief economic policy advisor, are said to be quietly pressing Obama to nominate Summers.
The choice of a Fed leader is perhaps the single most important economic policy decision Obama will make in his second term. Bernanke?s successor must lead the Fed?s fractious policymaking committee in deciding how much longer and how much harder it should push to stimulate growth and seek to drive down the unemployment rate.
Yellen?s selection would be a vote for continuity: She is an architect of the Fed?s stimulus campaign and shares with Bernanke a low-key, collaborative style. Summers, by contrast, has said he doubts the effectiveness of some of the Fed?s efforts, and his self-assured leadership style has more in common with past chairmen like Alan Greenspan and Paul Volcker.
But the choice also is roiling Washington because it is reviving longstanding and sensitive questions about the insularity of the Obama White House and the dearth of women in its top economic policy positions. Even as three women have served as secretary of state under various presidents and growing numbers have taken other high-ranking government jobs, there has been little diversity among Obama?s top economic advisors.
?Are we moving forward? It?s hard to see it,? said Romer, herself a late addition to Obama?s original economic team, chosen partly because the president wanted a woman.
She said she viewed the choice of the next leader of the Fed as a test of the administration?s commitment to inclusiveness. ?Within the administration there have been many successful women,? she said. ?There are lots of areas where women are front and centre, where women are succeeding and doing very well. Economic policy is one where they?re not.?
Supporters of Summers dismiss the idea that gender is a factor in the decision. They say they simply regard him as the best person for the job. They point to the fact that he has served in both of the other top economic policy positions ? as Treasury secretary in the Clinton administration and as chief economic policy advisor to Obama ? which makes him a known quantity who has demonstrated an ability to respond effectively to financial crises.
Yellen was widely seen as the front-runner to succeed Bernanke, but that appears to have reflected an absence of information about the views of Obama and his closest advisors. As word circulated in recent days that the president was seriously considering Summers, Yellen?s supporters have rushed forward to bolster her candidacy.
?It would be great to have a woman, the first woman chairman of the Fed, no question about it,? Rep. Nancy Pelosi of California, the House minority leader, told Bloomberg Television on Thursday. ?She?s extremely talented. It?s not just that she?s a woman.?
Pelosi said she also thought Summers was a qualified candidate.
On Thursday, Senate Democrats were rallying support for Yellen, with about a third of the 54 members of the caucus signing a letter backing her candidacy.
Summers? supporters are making less noise in public, partly because some of his primary advocates are inside the White House, while Yellen?s primary advocates mostly appear to be on the outside looking in.
Yellen declined to comment through a Fed spokeswoman. Summers did not respond to a request for comment.
Summers, 58, returned to his job as an economics professor at Harvard after leaving the Obama administration, but he has visited the White House at least 14 times in the last two years. The logs record only one visit by Yellen, 66. That is not unusual for a top Fed official in Yellen?s position ? her predecessors also spent little time at the White House ? but it is significant for a president who has often placed a premium on nominating people who he knows.
It also suggests the administration has not tried to groom Yellen for a promotion. Bernanke, by contrast, was plucked from his job as a Fed governor to work as chairman of President George W. Bush?s Council of Economic Advisers before being nominated as Fed chairman.
Women have held a number of top economic policy positions within the administration during Obama?s tenure. In addition to Romer, Lael Brainard is currently the country?s top financial diplomat, and Sylvia Mathews Burwell is the White House budget chief.
Neera Tanden, president of the Center for American Progress and a former administration official, said she saw a general problem, not a particular one. ?I think there should be more women across the board but I wouldn?t select out economic policymaking,? she said.
For years, economic policymaking has been dominated by a small, close-knit group of men who have known one another since the Clinton administration, if not before. In addition to Summers, Geithner and Sperling, the group includes Treasury Secretary Jack Lew, Daniel Tarullo, a Fed governor who has taken a leading role on financial regulation, and Jason Furman, currently nominated to be the head of the Council of Economic Advisers.
Numerous current and former administration officials have described the world as cloistered. A series of women who have worked alongside those men have ended their tenures saying they felt excluded and ignored. Recent examples include Sheila Bair, who ran the Federal Deposit Insurance Corp. during the financial crisis; Elizabeth Warren, who led the creation of the Consumer Financial Protection Bureau but was passed over for nomination as its first director in favour of a deputy, Richard Cordray; and Romer, who left the administration in 2010.
?I was always officially where I should be,? Romer said of her White House experience. ?When there was a quick meeting on the phone, or the side meeting, that?s when you felt like maybe business was being done or maybe I was being left out of things.?
Similarly, Yellen clashed with Sperling during the Clinton administration, when she ran the Council of Economic Advisers and he the National Economic Council, with the two engaging in turf battles and Yellen at times feeling pushed out of important decision making, colleagues at the time said.
Several former administration officials, who spoke about personnel policy only on the condition of anonymity, strongly disputed the idea that the White House was institutionally sexist, that Obama did not value the promotion of women or that women were excluded because of their gender.
But they acknowledged that women on the economic team had tended to hold advisory roles, rather than policymaking roles. They also said women tended to be further to the left than the more centrist Rubinites that have generally prevailed in policy debates.
Along with the Rubinite network of men, women in the Democratic economic policy world have created an informal network of their own over the last 20 years. Tyson, Romer and Yellen are especially close, calling one another for advice on navigating the world of White House politics and talking economic shop.
Tyson recommended Yellen for an open seat on the Fed?s seven-member board of governors, which oversees regulatory policy and sets monetary policy in consultation with the presidents of the 12 regional reserve banks.
She also helped to start the career of Brainard, now the Treasury undersecretary for international affairs, by battling for permission to break the rules by extending Brainard?s White House fellowship into a full-time position with the Council of Economic Advisers.
Romer helped put Janice Eberly up for a post as the Treasury?s chief economist.
The debate about the role of gender has spilled out well beyond the White House. Richard W. Fisher, president of the Federal Reserve Bank of Dallas, said this year that if the president chose Yellen, the decision would be ?driven by gender.?
Her supporters counter that being a woman appears to be hurting her chances.
But concerns about gender would not be determinative in the White House?s mind, officials with knowledge of the process said. The president?s comfort with the candidate, concerns about how well he or she would manage the Fed?s powerful Open Market Committee and deal with the market and Wall Street would be most important. Not to mention the likelihood of a candidate winning Senate confirmation.
?It?s an embarrassment of riches,? said Jared Bernstein, a former Obama administration economist who spoke at length of the brilliance of both candidates. ?He?s weighing who would do the best job at a sensitive time, and the differences here are nuanced.?
New York Times News Service
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