Speaking on the Charlie Rose show, the president said great things about Ben Bernanke. He also said this:
“He has already stayed a lot longer than he wanted, or he was supposed to.”
Put another way, Bernanke is on his way out. Which means running the Fed (and really our entire economy) will become somebody else’s job.
“This next Fed chairman is going to be in charge of unwinding extraordinary monetary ease,” says Steve Blitz, economist at ITG.
Unwinding ease is economese for reining back policies used to rev the economy out of recession or raising current low interest rates and ending quantitative easing.
“That is not an easy job,” says Blitz. “You have to do it in a way that you don’t undercut economic recovery, and that means keeping markets fairly stable.”
If you brake too fast, you’re gonna cause an accident, and if you don’t use your turn signal (i.e. communicate properly with the market around you), you’ll also cause an accident.
So who to pick?
Richard DeKaser, an economist with Wells Fargo, says Tim Geithner is a possibility. Geithner was head of the New York Fed and was appointed Treasury Secretary when the recession hit.
“Tim Geithner is known for crisis management,” says DeKaser. “He’s been on the spot in a number of ticklish situations going back to the Asian financial crisis.” But every nominee has vulnerabilities, too.
“A number of critics have suggested he's too friendly to Wall Street," says DeKaser. "I think that’s an unfortunate interpretation."
Then there’s Larry Summers, also a former Treasury Secretary and economic adviser to President Obama. On the age old question of whether the Fed chairman is a hawk (someone who focuses on inflation) or a dove (one who focuses on unemployment), Summers probably falls into the latter camp, says DeKaser.
Also, DeKaser adds, while Summers is “a brilliant economist,” he has a reputation for being “a bit touchy.” The Fed is known for being collegial and consensus oriented and “his reputation for being irascible might be problematic in that regard.”
There are other names, of course, but the one that most often comes up is the current Fed vice-chairwoman Janet Yellen.