Federal Reserve vice chair, former Treasury secretary top list of potential Bernanke successors

| Friday, July 19, 2013, 9:21 p.m.

WASHINGTON — President Obama's choice for replacing Federal Reserve Chairman Ben Bernanke probably comes down to a quiet consensus builder, who would be a historic pick, or one considered brilliant but difficult to work with.

Through unprecedented policy moves and public outreach, Bernanke has dramatically expanded the role and the profile of the nation's central bank. But neither he nor the White House has indicated whether he would seek a third term or be renominated.

It is widely expected, though, that Bernanke will step down when his term expires in January.

Janet L. Yellen and Lawrence H. Summers — the two leading contenders on the White House's short list — offer contrasting styles that could be crucial in the Fed's delicate task of withdrawing its stimulus efforts in the next few years without damaging the economic recovery.

Yellen, a soft-spoken and respected economist who has been the Fed's vice chair since 2010, is most likely to continue Bernanke's mix of aggressive steps to boost the economy and understated academic ways of explaining the central bank's actions.

The former University of California-Berkeley economics professor would be the first woman to lead the 100-year-old Fed.

Summers, the outspoken former Treasury secretary and Obama economic adviser, is known as a brilliant economist who also probably would continue the Fed's aggressive stimulus policies.

But the Harvard economist is known for having a prickly personality. And that means he's more of a wild card when considering how he would lead a Fed policymaking apparatus that strives for consensus and how he would communicate its actions to financial markets that can overreact to even the most carefully worded pronouncements.

A pick could be announced soon. But Obama advisers believe the president hasn't decided between the two and might be considering other candidates, including former Treasury Secretary Timothy F. Geithner.

Yellen and Summers are the leading contenders if Bernanke opts against a third term, according to administration officials familiar with the deliberations but who requested anonymity because they were not authorized to speak publicly.

Vincent Reinhart, former director of the Federal Reserve's division of monetary affairs, said Yellen and Summers are highly qualified for the tough task of replacing Bernanke.

“I think it's a very tough call,” said Reinhart, now the chief U.S. economist at Morgan Stanley.

A Fed spokesman said neither Bernanke nor Yellen had comments on their futures. Summers did not respond to a request for comment.

Summers ignited a furor as president of Harvard in 2005 when he suggested women were underrepresented in science and engineering because they lacked the aptitude of men. Summers resigned as president a year later as he faced a faculty no-confidence vote triggered by the comments.

“Larry Summers is certainly an excellent economist, but he does come with some baggage,” said Bernard Baumohl, chief global economist at the Economic Outlook Group. “I think that might well slow down the approval process, and this is not something this economy can afford at such a delicate time.”

Yellen, 66, has been a loyal ally of Bernanke since joining the Fed Board of Governors and, before that, as president of the Federal Reserve Bank of San Francisco. She also served a stint on the Fed in the 1990s and headed President Bill Clinton's Council of Economic Advisors in 1997-99.

No Fed vice chair has ever been elevated to chairman. But analysts said Yellen's history at the Fed would guarantee a smooth transition. Yellen has been the overwhelming front-runner to replace Bernanke in recent polls of economists and investors.

“My sense is she'd be a very good consensus builder, and that's really important,” said Jared Bernstein, the former chief economist to Vice President Joe Biden.

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