It's long been expected that Ben Bernanke would leave his position as chairman of the Federal Reserve when his second term expires on January 31, 2014. But when President Barack Obama told talk show host Charlie Rose that Bernanke had "already stayed a lot longer than he wanted or he was supposed to" on Monday night, this expectation became a near certainty.
The question of who the president will nominate to succeed Bernanke will probably be answered sometime this summer. The president will want to make sure the Senate has plenty of time to consider and confirm his nominee — and that the financial markets have time to digest the news.
Janet Yellen is the top contender for the job. The Fed vice chair has been an advocate of Bernanke's policies — including successive rounds of bond buying by the Fed, so-called 'quantitative easing,' aimed at keeping rates at historic lows. Yellen's elevation would ensure a smooth transition, avoiding any fears of an abrupt change of policy. She would also be the first woman nominated to the Fed's top job, which likely would help disarm some Senators concerned about her reputation as a "dove" on inflation. At 66, she's older than the other likely candidates for the job, which may work in her favor as she's likely to be a single term chair.
Christina Romer is now a professor at the University of California, Berkley. She served as one of the principal architects of the Obama Administration's economic recovery plan and chairwoman of the White House's Council of Economic Advisers. The stimulus plan advocated by Romer was much larger than what was actually passed into law — which may mean that her nomination would spark opposition by Republican lawmakers. She's written that tax increases can hurt economic growth, however, which could make her appealing to anti-tax advocates.
Lawrence Summers is well-respected for his intellectual firepower in Washington, but also regarded as "prickly." He was Obama's first national economic council director and treasury secretary under Bill Clinton. He opposed Romer's original stimulus plan as too large but more recently said that "countries regarded as havens that can borrow long term at a very low cost should be rushing to take advantage of the opportunity." This stance in favor of more long-term debt may give rise to opposition from budget balancers on Capitol Hill. And then there's that whole women in science controversy left over from when he served as President of Harvard University.
Roger Ferguson is the chief executive officer of TIAA-CREF, which manages over $480 billion of retirement assets for many educational, cultural and health care organizations. He was vice chairman of the Fed from 1999 to 2006. His private sector experience could be a plus for his confirmation chances, although some progressives may balk at putting a financial services executive in charge of the Fed. His role leading Fed bank supervision in the years preceding the financial crisis could also stir controversy from those critical of regulators for going too easy on banks.
Alan Krueger is the chairperson of President Obama's Council of Economic Advisors. He is considered an expert on labor markets an advocate of the idea that expansionary fiscal policy must accompany accommodative monetary policy to bring about a healthy recovery. This would likely make him the target of opposition by austerity-minded lawmakers.
Tim Geithner's name is often mentioned as a possible successor. But it's hard to believe he wants to jump right back into the fray of Washington policy making. He's said that he doesn't want the job. He's controversial on Capitol Hill, drawing fire from the right (for his support for Obama administration policies) and left (for allegedly being too easy on banks). No one winds up Fed chair without wanting the job and in the face of determined bipartisan opposition.