Over the past month, two things have become pretty clear: 1) President Obama really wants Larry Summers to be the next Fed Chair after Ben Bernanke and, 2) that almost no one else wants him in that role. Is it possible to get Summers confirmed? Yes, but only through a bruising battle with both the Republicans and Democrats, something which the White House may not want in the end.
An even bigger problem though is that by focusing so heavily on Summers, the president has inadvertently narrowed the field down to only two candidates: Larry Summers and Janet Yellen.
Yellen, however, is not necessarily the right choice either. While she is well-credentialed, she is primarily an academic and has no track record to demonstrate that she will be a tough regulator as the Fed Chair; and with the next Fed Chair being tasked with the critical function of implementing the Dodd-Frank financial reform law, regulatory toughness will be key. In fact, the GOP's recent endorsement of Yellen actually gives the possibility that she will be a soft regulator even more credence, given the GOP's unflagging loyalty to big money interests, and should give us serious pause.
Let's face it, Yellen's biggest selling point right now is that she is not Summers, which is hardly a criterion on which to fill such an important seat in government, but if the White House is not careful, it will wind up with no choice but to nominate Yellen, a candidate whom Obama himself is not so keen about, and saddle the nation with a good but not great Fed Chair. Instead, the president would do well to widen the field and seriously start considering candidates who would be a better fit for this role so that the best person for the job actually gets it.
To be clear, I am not saying that Yellen (or even Summers) does not deserve honest consideration, but that consideration should be based on an open comparison with other qualified candidates, not on the political spin that is driving this process right now. With so many brilliant and dedicated people out there who could fill this spot, including Robert Reich and even Paul Krugman, why are we being presented with only two average choices?
Given the vital role that the next Fed Chair will play in safeguarding our fragile economic recovery and in regulating the runaway excesses of Wall Street, we deserve better.
SANJAY SANGHOEE is a political and business commentator. He has worked at leading investment banks and hedge funds, has appeared on CNBC's 'Closing Bell' and HuffPost Live on business topics, and is the author of two thriller novels. For more information, please visit www.sanghoee.com
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