Summers Versus Yellen: What if the Senate Were Full of Economists?

Photograph by Sam Hodgson/Bloomberg

Janet Yellen, vice chairman of the U.S. Federal Reserve, smiles before speaking at the American Economic Association’s annual meeting in San Diego, California, on Jan. 4, 2013.

President Barack Obama’s nominee to succeed Federal Reserve Chairman Ben Bernanke will have to win the backing of the Senate to take office.

If the Senate were full of economists, it would be good news for Fed Vice Chairman Janet Yellen. More than 300 academic economists and counting have signed an open letter encouraging Obama to nominate her as Bernanke’s successor.

“She is the best possible leader for the Federal Reserve Board at this critical time in our nation’s history,” the letter states.

The signatories include many heavyweights of economics: Nobel Laureate Joseph Stiglitz, Michael Woodford, whose ideas about central bank communications have been adopted at the Fed, the European Central Bank, the Bank of Canada and the Bank of England, and Mark Gertler, a New York University professor who has co-written research with Bernanke.

Two former vice chairs of the Fed, Alan Blinder and Alice Rivlin, also signed the letter. There are signatories from Harvard, Yale, Princeton, Columbia, Stanford, Berkeley, Chicago, and many more. If Yellen doesn’t get picked to run the Fed, she’ll surely be welcome to lecture at nearly any university in the country.

Of course, none of those academics are in the Senate, and aside from Obama, senators are the only people who have a say.

The letter does not mark the first time Yellen supporters have publicly sought to persuade the president. A group of 20 senators in the Democratic caucus also submitted a letter to Obama in July in support of Yellen.

“We believe that she is the best person for this job,” the senators wrote.

Neither the academics nor the senators mentioned by name Yellen’s chief rival for the job, Lawrence Summers, the former Harvard president, Obama economic adviser and former Treasury Secretary under Bill Clinton.

Both may refer to him elliptically. Yellen is “not beholden to a single interest group, nor to a single industry,” the academics wrote. While Yellen has bounced between academia and government service, Summers has made a fortune working for financial services companies on Wall Street.

The senators said that Yellen has the “independence, intellectual rigor and willingness to challenge conventional wisdom regarding deregulation.” Summers, by contrast, supported deregulation in the 1990s as a Treasury official.



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