Uhm no: why progressives don’t want Larry Summers as Fed Chair by Chris Hayes
by digby
If you are looking for a perfect, concise argument for the appointment of Janet Yellen as Fed Chair, look no further than this excellent Chris Hayes commentary:
I think I’ve been to generous to Summers. His real qualifications for this job are thinner than I realized:
He doesn’t seem particularly interested in monetary policy. Monetary policy—controlling the country’s money supply—is the Fed’s key policy lever. But Summers, for all his notorious outspokenness, has given very few indications that feels strongly about it one way or the other.
“Most indications suggest he doesn’t think it’s very important right now, so it’s kind of weird that he’d want the job [of Fed chair],” said Konczal.
“He’s kind of poo-pooed the role of the Fed, at least seemingly,” said Baker.
But ok, so a bunch of dirty hippie Commies don’t like Summers and want some feminazi to run the world’s most important Central Bank. Who cares, right? Well…
Wall Street has spoken: It would rather President Barack Obama pick Janet Yellen than Larry Summers to be the next Federal Reserve chair. In fact, it would just as soon pick CNBC reporter Steve Liesman to run the Fed as Summers.
Wall Street favors Yellen by a surprisingly wide margin: CNBC asked bankers and traders who should run the Fed if and when Ben Bernanke steps down at the end of his term in January, and 50 percent of them chose Yellen, currently the Fed’s vice chairman.
Larry Summers, the former Treasury secretary and economic adviser to Obama, got a whopping 2.5 percent. Also getting 2.5 percent was Liesman, CNBC’s economics reporter.
The second-biggest vote-getter was Bernanke, with 12.5 percent of respondents saying they’d rather see him get a third term heading the Fed. Tied with Bernanke was Stanford economist John Taylor, a favorite of conservatives.
Wall Street’s support for Yellen might seem surprising at first, given that Summers was part of the crew that deregulated the financial sector back in the 1990s. That helped lead to the financial crisis, sure, but it also lined the pockets of Wall Street. Banks are now pushing hard against post-crisis rules regulations, and having a Wall Street-friendly guy like Summers in charge of the Fed, a key bank regulator, might seem like a no-brainer.
But Wall Street has much more on its mind than regulation, and its other concerns help explain the support for Yellen.
For one thing, Yellen is widely seen as more “dovish” than Summers, meaning she favors easier monetary policies than Summers. Wall Street loves it some sweet, sweet easy money, of course, but it also likes economic growth, all else being equal, and it’s easier to see Yellen getting behind stimulus for the economy.
“Yellen is seen as being in the same vein as Bernanke and thus a continuation of monetary stimulus for longer,” Anthony Cronin, a bond trader at Societe Generale SA, told the Wall Street Journal’s Min Zeng. “Summers is a bit of an unknown monetary policy-wise for the market, increasing the risk that he may be more hawkish than the Bernanke/Yellen camp.”
The other, more surprising factor helping Yellen with Wall Street seems to be concern about Summers’ personality. Yellen is personally a lot more like Bernanke — soft-spoken, collegial, academic — while Summers occasionally has the temperament of a raccoon that has just been thrown down the stairs.
Wall Street has gotten accustomed to the Bernanke approach and doesn’t want to see it changed dramatically.
“They support Yellen because they think Summers is a little more prickly, a little more difficult and may not be as good a communicator,” CNBC reporter Bob Pisani said on-air on Friday.
Yeah, that’s a concern alright. The fellow who drops little rhetorical bombs everywhere he goes might not be the best choice to head the Fed during a very challenging economic time with skittish markets riding an asset bubble. Just saying …
The Democratic old boys network that’s favoring Summers doesn’t want to lose control. But they need to open up their circle to include women who’ve consistently been right while they have consistently been wrong. They may not understand they need to do this, but they do:
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