Obama’s Fed Process Starts With Private Auditions

Photographer: Kiyoshi Ota/Bloomberg

Federal Reserve Vice Chairman Janet Yellen has been in the vice chair position since October 2010. Close

Federal Reserve Vice Chairman Janet Yellen has been in the vice chair position since October 2010.

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Photographer: Kiyoshi Ota/Bloomberg

Federal Reserve Vice Chairman Janet Yellen has been in the vice chair position since October 2010.

President Barack Obama will make “a very aggressive” case to win bipartisan support for his choice for the next U.S. Federal Reserve chairman, a decision that remains weeks away, his spokesman said.

Josh Earnest, deputy White House press secretary, said the administration was unconcerned by the public pressure being exerted by some Senate Democrats on behalf of Fed Vice Chairman Janet Yellen, one of several potential candidates. Obama is considering who should succeed Ben S. Bernanke, whose term expires Jan. 31.

“It wasn’t a surprise to anybody here that members of the Senate had strong opinions,” Earnest told reporters on Martha’s Vineyard in Massachusetts, where the president is vacationing this week. “I am confident that whomever the president nominates won’t just have strong Democratic support, but will also deserve strong bipartisan support.”

Earnest repeated Obama’s previous remarks that he won’t make a decision on the Fed chairman “until the fall.” He declined to say whether the president has or will spend any part of his vacation speaking by phone or meeting in person with potential candidates, or discussing the process with staff, lawmakers or any of the business leaders and politically connected individuals he’s seeing this week on the golf course or at social functions.

“I don’t want to set a precedent about how open this process is going to be,” Earnest said. “I don’t think it’s going to be particularly constructive for us to have an open audition, if you will, for the Fed nominee position.”

Aides Meeting

Aides to Obama and Senate Majority Leader Harry Reid discussed the process of choosing the next Fed chairman in the wake of a letter from a group of Senate Democrats promoting Yellen, according to a person briefed on the conversation who asked for anonymity.

The letter, signed last month by 19 Senate Democrats and one independent who caucuses with the party, emerged amid criticism from some Democrats of another possible contender, Lawrence Summers, who served as Obama’s first National Economic Council director.

The Fed selection process came up during a meeting between Deputy White House Chief of Staff Rob Nabors and David Krone, chief of staff to Reid, a Nevada Democrat, said the person. The two officials meet about once a week, according to a congressional aide who asked not to be identified discussing private conversations.

Administration Surprise

Senior White House staff members were surprised by the Democrats’ letter, especially given that the president had made clear he hadn’t settled on a nominee, said the person familiar with the meeting.

Although Obama hasn’t raised the issue of the letter specifically, he wants political breathing room as he makes a final decision on Bernanke’s replacement, the person said. The Wall Street Journal reported on the meeting earlier.

During a White House news conference last week, a day before leaving for vacation, Obama said he was weighing a “range of outstanding candidates” to lead the central bank, including Summers and Yellen.

“The perception that Mr. Summers might have an inside track simply had to do with a bunch of attacks that I was hearing on Mr. Summers pre-emptively, which is sort of a standard Washington exercise that I don’t like,” Obama said. “I tend to defend folks who I think have done a good job and don’t deserve attacks.”

Defending Summers

Obama, 52, told House Democrats during a closed-door meeting July 31 that Summers was being unfairly criticized.

In his news conference, he compared Summers to his National Security Adviser Susan Rice. Obama didn’t nominate her for Secretary of State after a backlash over statements she made following the attacks on a U.S. diplomatic outpost in Benghazi, Libya, last September in which four Americans died.

Reid said after a July 31 meeting between Obama and Senate Democrats that party members in his chamber would support the president’s choice for the Fed, “no matter who it is.”

While Bernanke hasn’t said whether he’d be willing to stay for a third term, Obama indicated in a June interview with Charlie Rose that the Fed chief had stayed in the post “longer than he wanted.” Earnest said today that he didn’t know whether Bernanke has given Obama formal notification of his intentions.

Yellen, 67, has been the Fed vice chairman since October 2010. Summers, 58, who served as Treasury secretary from July 1999 to January 2001, returned to government in 2009 as National Economic Council director during Obama’s first term. The president told House lawmakers that he was also considering former Fed Vice Chairman Donald Kohn, 70, for the job.

Some Senate Democrats, including Richard Durbin of Illinois, have publicly questioned whether Summers should lead the Fed. They’ve raised concerns about his role in advocating financial-industry deregulation during President Bill Clinton’s administration that many blame for later helping create the financial crisis.

To contact the reporter on this story: Margaret Talev in Edgartown, Massachusetts at mtalev@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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