White House wants pushover bubble-watching Fed chair who would be fun to have a beer with during a crisis: That’s our exaggerated (but not too much) reaction to reading Neil Irwin’s column on the reasons that White House insiders are uneasy with Janet Yellen as Fed chair.
Roughly, the reasons are that she has demonstrated an independent streak in her role as Fed vice chair, is big on preparation and prefers deliberate thinking to a “manic” problem-solving approach, and is more worried about unemployment right now than about fighting asset bubbles.
To reiterate, those are considered bad things.
Look, there are intelligent cases to be made for Summers over Yellen, though obviously we disagree with them. Brad DeLong has made one, as have Tyler Cowen and Roger Altman.
But if Irwin’s column accurately reflects the sophistication of the thinking inside the Obama administration, then it would seem to confirm what we originally thought: the White House, whether because of laziness or an insulated process, just hasn’t done anything close to the appropriate diligence on what the moment requires from a new Fed chair. ...
The White House’s anti-Yellen sexism, cont.: Neil Irwin is not going to have made many friends in the White House with today’s piece on the problems the Obama administration has with Janet Yellen. It makes the White House economic team seem insular, sexist, and deeply mistaken about what the right and proper role of the chairman of the Federal Reserve Board should be. Worse, there’s every reason to believe that Irwin’s piece is entirely accurate.
Irwin enumerates three main reasons why the White House is underwhelmed with Yellen. The first is the “team player” attack: Yellen is an independent thinker more than she is a loyal deputy to Bernanke. And because she was 3,000 miles away from the action during the financial crisis (she was running the San Francisco Fed), she never became part of the boys’ club which was making enormous decisions on a daily basis in the fall of 2008.
As Irwin puts it, “she was on the outside looking in regarding some of the seat-of-the-pants decisions that were being made over how to rescue the American economy” — and the people who made those decisions are the exact same people who are advising Obama on whom to nominate as Fed chair. They have all worked closely with Summers, they enjoy the way he makes decisions, and they’ve all been through various crises with each other.
The “team player” argument, then, is basically the “one of us” argument, thinly disguised. Which is the first place that the sexism comes in: everybody named as being part of the “team” (Larry Summers, Tim Geithner, Ben Bernanke, Bill Dudley, Don Kohn, Kevin Warsh, Gene Sperling) is undeniably male — and, what’s more, the kind of male who takes great pride in his own intelligence, and loves it when the world knows just how smart he is.
But it gets worse...
Neil Irwin Listens to Footsteps in the Topkapi Palace: Federal Reserve Succession Weblogging: ... I am not at all sure that what Neil has heard is what the White House staff meant for him to hear. But I must say that I find my line--that either would be an excellent choice, but that I have a small preference for Summers over Yellen because if we wind up in the lower tail of the outcomes distribution we would rather have a central banker not bound by a perhaps-outdated past Fed consensus--more convincing.
Wanted: A Boring Leader for the Fed: The debate over who should succeed Ben S. Bernanke, the chairman of the Federal Reserve, has been exceptionally personality-driven. Supporters and opponents of the two leading contenders — Lawrence H. Summers ... and Janet L. Yellen ... have been feuding in public. ...
What all sides seem to misunderstand, however, is the proper nature of the central bank’s role in the economy. Instead of casting about for a new maestro, we need to return the Fed to dullness and its chairman to obscurity. ...
The Fed’s chairmen in recent decades have been eminently qualified individuals of undisputed probity. But they are humans, too, whose blind spots, egos and potential conflicts of interest — Mr. Greenspan has had a lucrative post-Fed career giving speeches and advice — raise real concerns about hubris, even bias. ...
Perhaps the most important qualification for the next Fed leader is one all too rare in Washington: humility.
Yellen is my choice, by a considerable margin.