President Barack Obama won’t nominate a successor to Federal Reserve Chairman Ben S. Bernanke until at least September, an administration official said, as a group of Democratic senators urged him to choose Fed Vice Chairman Janet Yellen.
Obama hasn’t made a decision, according to the official, who asked not to be identified in discussing internal planning. Bernanke, whose second four-year term ends on Jan. 31, hasn’t indicated whether he would seek or accept a third term.
Last month, Obama said the Fed chairman has stayed in the post “longer than he wanted.” White House officials have begun to focus on how Obama will leave his mark on the central bank. The Associated Press reported the timing earlier.
About a third of the 54-member Senate Democratic caucus signed a letter praising Yellen and encouraging Obama to nominate her, according to three Senate aides who asked not to be identified discussing internal matters. While the letter, sent today and obtained by Bloomberg News, doesn’t identify any other candidate, former Treasury Secretary Lawrence Summers is another potential pick.
“Our nation badly needs a chairman with a solid record as a bank regulator,” the senators wrote, adding that Yellen, as president of the San Francisco Fed, “identified the impending threats that both the housing bubble and the shadow banking sector posed to our entire economy.”
“This prescience speaks to her independence, intellectual rigor, and willingness to challenge conventional wisdom regarding deregulation -- essential traits for a successful Fed chairman,” the senators wrote, while also highlighting her “significant monetary policy experience.”
The letter campaign, led by Senator Sherrod Brown of Ohio, demonstrates the support that Yellen is gaining for the nomination and the struggle that Summers may face in winning Senate confirmation, if nominated.
Summers, 58, led the Treasury Department under President Bill Clinton and was Obama’s first National Economic Council director. He has worked as a paid consultant for Citigroup Inc. since at least 2012, according to Danielle Romero-Apsilos, a spokeswoman for the New York-based lender. She declined to say how much he is paid by the bank, the third-biggest in the U.S.
“In addition to speaking at internal meetings, we engage Mr. Summers for small private-bank client and institutional client meetings,” Romero-Apsilos said in a statement. “He provides insight on a broad range of topics including the global and domestic economy.”
The Fed is one of the primary regulators of the nation’s lenders, and the Citigroup tie could fuel opposition to Summers, who as Treasury secretary was an advocate for financial deregulation before the banking system almost collapsed in 2008.
Senators Jeff Merkley of Oregon and Tom Harkin of Iowa are among the senators who’ve signed the letter. Brown said earlier this week he supported Yellen.
“She’s done well as part of the Fed in the last months and months,” Brown, a member of the Senate Banking Committee, said in an interview on July 23. “She really has been a cool, smart head. To mix metaphors here, she has her hand on the public pulse, I think, better than your traditional Fed governors or presidents, and I think that would matter.”
Yellen, the No. 2 Fed official since 2010, would be the first female leader in the central bank’s 100-year history. She was a University of California, Berkeley, economics professor who specialized in labor-market research before serving as chairman of Clinton’s Council of Economic Advisers and president of the San Francisco Fed.
House Democratic Leader Nancy Pelosi said “it would be great to have a woman” to run the Fed. Yellen is “extremely talented,” the Californian said on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.
“I just don’t recall one party banding together like this,” said Nick Sargen, a former San Francisco Fed economist who oversees $45 billion as chief investment officer at Fort Washington Investment Advisors in Cincinnati. “The Fed in the past has fought for its independence and it wants to be viewed as not part of the political process, so you could argue that this is a movement towards more politicization of the Fed.”
Yellen, 66, has consistently backed the Fed’s accommodative monetary policy and led its unprecedented efforts to expand and overhaul its communications strategies. The Federal Open Market Committee is buying $85 billion in bonds each month and has kept the main interest rate near zero since December 2008 to spur growth and reduce unemployment that was 7.6 percent last month.
“Janet Yellen would be outstanding,” Senator Barbara Boxer, a California Democrat, said in an interview July 24. “I’ve known her for a long time. She has tremendous experience and the right temperament, and I think it would be great to have her.”
Bernanke said in a March 20 news briefing that he has “spoken to the president a bit” about his plans and feels no personal responsibility to remain in the job. He said he doesn’t see himself as the only one qualified to lead the Fed as it exits stimulus measures that have pushed its balance sheet to a record $3.57 trillion.
A third of those surveyed in a Bloomberg Global Poll of investors, analysts and traders in May said they expected Yellen to succeed Bernanke, while Summers was cited by 6 percent. In an April poll of investors by International Strategy & Investment Group, 65 percent said Yellen was most likely to take over compared with 5 percent for Summers.
Summers’s potential nomination has already drawn opposition from some lawmakers. Merkley, a Democratic member of the banking panel, posted a message on the Twitter Inc. website July 23 that said: “Larry Summers for Fed Chair? Disconcerting... many questions to answer.”
Summers is “political where you think of the Fed as being nonpolitical,” said Keith Hembre, who helps oversee $125 billion as chief economist at Nuveen Asset Management LLC in Minneapolis.
“Loose cannon might be too strong a term, but he’s a little bit on the toxic side,” said Hembre, a former researcher at the Minneapolis Fed.
New York’s Chuck Schumer, the 100-member Senate’s third-ranking Democrat and a member of the Banking Committee, said he didn’t have a preference and wouldn’t “pre-judge” Obama’s potential picks.
Senators Ron Wyden, a Democrat from Oregon, and Mike Johanns, a Republican from Nebraska, said they support Summers without ruling out also being able to back Yellen. “I know Dr. Summers better because I’ve dealt with him over the years,” Wyden said.
Wyden spokesman Ken Willis said Wyden hasn’t endorsed a candidate to replace Bernanke “and he would be equally comfortable” with Summers or Yellen.
“Both are smart and qualified for the job,” Willis said.
“I know Larry. He’s a really good guy, very, very smart,” Johanns said. “So I guess what I’d say today without trying to handicap the support is that I’d be open to him.”
Summers, who served as president of Harvard University from 2001-2006, drew fire from faculty and women’s groups after he said in a 2005 speech that “innate” differences between the sexes could partially explain the shortage of elite female scientists.
Senator Elizabeth Warren, a Massachusetts Democrat and former Harvard Law School professor, said Summers and Yellen are both “very smart people.” Asked in a Bloomberg TV interview whether Summers could be confirmed, she said: “I don’t know.”
Speculation about Summers for the position has been fueled, in part, by his previous interest in the job, as well as by Obama’s statements indicating that he doesn’t expect Bernanke to remain in the post.
Bernanke has stayed at the Fed “a lot longer than he wanted or he was supposed to,” Obama said in an interview with Charlie Rose broadcast on PBS television June 17. He praised Bernanke for having done an “outstanding job.”