Isakson Might Support Summers While Questioning His Independence
Republican Senator Johnny Isakson of Georgia said he might support Lawrence Summers to head the Federal Reserve even as he raised questions about the former Obama administration official’s political independence.
“I do have some concerns with Larry Summers,” Isakson said at a Bloomberg Government breakfast in Washington today. “That doesn’t mean I might not in the end vote for him.”
Isakson said the new chairman should be transparent and a “great communicator,” and Summers might have that skill. “He may also demonstrate that he’s more political than maybe you would want the Fed chairman to be,” he said.
Chairman Ben S. Bernanke’s term expires at the end of January, and his successor will require confirmation by the Senate. The top contenders to replace him are Summers, 58, Obama’s former National Economic Council director, and Fed Vice Chairman Janet Yellen, 67. President Barack Obama, who will nominate the next chairman, has also mentioned former Fed Vice Chairman Donald Kohn, 70, as a candidate.
Isakson said he has never met Yellen. “The vice chairman, what’s her name?” he said. “I have not met her yet, I haven’t had a chance to engage with her, so I would postpone any conclusion.”
The nomination must be approved by the Senate Banking Committee before it goes to the full Senate. Isakson isn’t a member of the committee.
About a third of the 54-member Senate Democratic caucus, in a July letter, urged Obama to nominate Yellen. She also won the endorsement of more than 300 economists who signed an open letter to Obama.
Forty percent of investors, analysts and traders who are Bloomberg subscribers see Summers getting the job, compared with 33 percent for Yellen, according to a Bloomberg Global Poll conducted Sept. 10.
Bloomberg’s poll shows that Yellen is viewed more favorably among investors. Sixty percent of respondents had a positive view of Yellen, compared with 37 percent for Summers. Thirty-five percent had a negative view of Summers, compared with 15 percent for Yellen.
U.S. central bankers are debating how and when to pare their $85 billion in monthly bond purchases as the U.S. economy improves and unemployment declines. The Federal Open Market Committee is scheduled to meet Sept. 17-18 to consider the future for the third round of quantitative easing known as QE3.
Thirty-five percent of respondents say Summers might provide less stimulus than Bernanke, compared with 13 percent who see Summers with looser policy and 22 percent saying it would be the same. Forty-seven percent see Yellen presiding over the same policy, with 17 percent saying it would be looser and 8 percent saying tighter. The rest said they don’t know how it would change.
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