http://blogs.reuters.com/felix-salmon/2013/08/20/the-white-houses-anti-yellen-sexism-cont/
The White House’s anti-Yellen sexism, cont.
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Neil Irwin is not going to have made many friends in the White House with today’s piece on the problems the Obama administration has with Janet Yellen. It makes the White House economic team seem insular, sexist, and deeply mistaken about what the right and proper role of the chairman of the Federal Reserve Board should be. Worse, there’s every reason to believe that Irwin’s piece is entirely accurate.
Irwin enumerates three main reasons why the White House is underwhelmed with Yellen. The first is the “team player” attack: Yellen is an independent thinker more than she is a loyal deputy to Bernanke. And because she was 3,000 miles away from the action during the financial crisis (she was running the San Francisco Fed), she never became part of the boys’ club which was making enormous decisions on a daily basis in the fall of 2008.
As Irwin puts it, “she was on the outside looking in regarding some of the seat-of-the-pants decisions that were being made over how to rescue the American economy” — and the people who made those decisions are the exact same people who are advising Obama on whom to nominate as Fed chair. They have all worked closely with Summers, they enjoy the way he makes decisions, and they’ve all been through various crises with each other.
The “team player” argument, then, is basically the “one of us” argument, thinly disguised. Which is the first place that the sexism comes in: everybody named as being part of the “team” (Larry Summers, Tim Geithner, Ben Bernanke, Bill Dudley, Don Kohn, Kevin Warsh, Gene Sperling) is undeniably male — and, what’s more, the kind of male who takes great pride in his own intelligence, and loves it when the world knows just how smart he is.
But it gets worse:
She is methodical, not manic. And the prevailing style of the White House insiders advising on the decision leans a bit more toward manic. Geithner, for example, jumps from meeting to meeting, from hearing to phone call, without so much as a set of talking points to work from.
This second reason essentially takes the “team player” argument past its breaking point, to the point at which the Obama team is basically saying “Yellen needs to share our biggest weaknesses.” Sometimes crises move so fast that policymakers have no choice but to make decisions on the fly; when that happens, however, the decisions often turn out to be pretty bad. The story of the European crisis is full of such episodes, but for a domestic example, look no further than the image of Tim Geithner, at the New York Fed, doing his best deranged-Yentl impression as he desperately tries to engineer improbable mergers between Lehman and Barclays, or Citi and Goldman, or just about anybody and just about anybody else. The bankers, to their credit, managed to stand up to the pressure from their primary regulator — but even Geithner would admit that this was not his finest hour. This is not really a criticism of Geithner — we all make bad decisions when we haven’t had remotely enough sleep and we’re extremely stressed. But it’s ridiculous to think that a more deliberative approach is in any way inferior.
Maybe this bias towards the manic is what Obama is really talking about when he says that he wants a Fed chair who’ll be good in a crisis. The implied logic: Yellen is perfectly good if you give her lots of time to sit down and slowly work things out. But crises move fast, and no one thinks faster than Summers. Yellen’s brain isn’t as fast and fecund and facile as Summers’s brain, so we’d better appoint Summers.
Spelled out like that, the argument is downright offensive — and, of course, highly sexist.
“The question,” Irwin writes, “is how Yellin’s cautious approach would work when she is dealing with the full panoply of issues that a Fed chair must grapple with”. The answer, surely, is that the Fed chair is the number one place where, ex ante, a cautious approach is exactly what you would want. Someone who carefully scripts her words before saying anything? Someone who insists on thinking things out before acting? Yes please! The only conceivable reason to believe otherwise is if you’ve already decided, through personal friendship, that you want Summers to be the nominee, and then simply decree that whatever attributes Summers has and Yellen doesn’t are precisely the attributes you’re looking for.
Which brings us to Irwin’s final reason to be uneasy about a Yellen Fed: she’s more worried about reducing unemployment than she is about staving off bubbles. Or something like that — it’s not entirely clear. This of course is exactly as it should be: the Fed has a formal written mandate to reduce unemployment, while for much of its history it has operated with a policy that it’s pretty much impossible to identify bubbles and deal with them in real time. Yellen says that she’s serious when it comes to worrying about bubbles — but for whatever reason she isn’t considered seriousenough, compared to Summers. (Which is pretty funny, given the degree to which Summers-era deregulation helped inflate bubbles of the past.)
More to the point, as Brad DeLong notes, it’s simply wrong to say that Yellen’s weak when it comes to identifying bubbles:
Yellen was equal to Ned Gramlich and out in front of all other Federal Reserve policymakers in the 2000s in her real-time worries about the housing bubble. Demonstrated ability to see a bubble and think about its risks in real time is one of Yellen’s strengths, not a weakness.
DeLong’s reaction is telling: he supports Summers, and still finds all of the administration’s arguments to be woefully weak. This entire debate strikes me as one of the most badly-orchestrated trial balloons I’ve seen in a very long time. If the White House wanted to maximize the degree to which people would think the Obama administration to be clubby and sexist and insular and narrow-minded, it could hardly do better than it has done when whispering about Larry at the Fed. And by making it clear that no decision is going to be made for a while, the White House is only ensuring that the same story is going to get repeated ad nauseam for weeks to come.
The chairman of the Fed is a position which requires the trust of the public. Larry Summers does not have that trust: indeed, almost uniquely, he’s mistrusted by the left, by the right, and by Wall Street in equal measure. He is, however, trusted by the president of the United States. Is Obama really so arrogant as to privilege his idiosyncratic personal opinions so highly, when the obvious candidate is right in front of his face? I hope not. But I’m losing optimism.
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/08/20/why-the-white-house-is-uneasy-with-picking-janet-yellen-as-fed-chair/
Why the White House is uneasy with picking Janet Yellen as Fed chair
Obama advisers have reservations about having the current Fed vice chairwoman succeed Ben Bernanke. (Federal Reserve/Flickr)
Many of the economic advisers whom President Obama consults with favor Larry Summers to be the next chair of the Federal Reserve. But what is it, exactly, that they have against Janet Yellen, the current No. 2 leader of the central bank?
In the course of reporting the profile that Ylan Mui and I wrote of Yellen (it ran over the weekend. Read it!) I came across aspects of the vice chairwoman’s style and experience that help explain why Obama’s inner circle of economic advisers has little apparent enthusiasm for her as Fed chief. Our sources were primarily people who have worked with Yellen at various stages of her career, and they overwhelmingly spoke favorably of her intellect, diligence and approach to leadership. But there are some aspects of how she operates that are different from the qualities that Obama insiders favor.
When she arrived at the Fed as its No. 2 official in 2010, Yellen carved out a different kind of role from her two immediate predecessors in the job, Don Kohn and Roger Ferguson. Kohn and Ferguson worked much like deputies to the chairman, acting as close confidantes to Ben Bernanke and Alan Greenspan and then helping them carry out their decisions.
Yellen has a perfectly solid relationship with Bernanke, as best as I can tell, but she’s more of her own thinker within the institution. She has spent her time as vice chairwoman urging Bernanke and her other fellow policymakers to shift policy to try to do more to combat unemployment, and thinking through ways to do just that. She even had one economist who functioned for a time as something of a de facto chief of staff, Andrew Levin. And people dealing with her within the Fed have viewed her not so much as Bernanke’s emissary but as her own intellectual force within the organization.
So what does that have to do with how Obama’s advisers might view her? They are big on the team player concept, people diving in together to sort through the hard and messy challenges they face. When Timothy Geithner was New York Fed president, for example, he, Bernanke, and Kohn were very much a team plotting the central bank’s response to the financial crisis (other key players in that tight-knit group were Bill Dudley, then the head of the New York Fed’s markets desk, and Kevin Warsh, then a Fed governor in Washington). In the early months of the Obama administration, the same could be said of the group that included Geithner, Summers, Gene Sperling and others who are now influential voices advising the president on the decision.
Throughout this time, Yellen was running the San Francisco Fed — very effectively, according to interviews with people who worked with her closely before and during the crisis. But she was on the outside looking in regarding some of the seat-of-the-pants decisions that were being made over how to rescue the American economy.
A second, and related, reason that Yellen’s leadership style isn’t a great mesh with the Obamaites is also one of her strengths. She is always meticulously prepared, a careful and systematic thinker who chooses her words carefully. In a Fed policy committee meeting or a gathering of international central bankers, she typically scripts herself in advance and reads those prepared comments.
She is methodical, not manic. And the prevailing style of the White House insiders advising on the decision leans a bit more toward manic. Geithner, for example, jumps from meeting to meeting, from hearing to phone call, without so much as a set of talking points to work from. The question is how Yellin’s cautious approach would work when she is dealing with the full panoply of issues that a Fed chair must grapple with.
Third, the president very clearly frets about the risk of financial bubbles and wants a Fed chief who will be attuned to staving them off. As David J. Lynch of Bloomberg points out, four times in five days Obama recently referred to the importance of returning to “artificial bubbles” as a means of supporting growth. When New York Times reporters asked the president about his thinking on the Fed choice, he said: “I want a Fed chairman that can step back and look at that objectively and say, let’s make sure that we’re growing the economy, but let’s also keep an eye on inflation. And if it starts heating up, if the markets start frothing up, let’s make sure that we’re not creating new bubbles.”
Yellen has been at the forefront of the Fed’s thinking on how to use unconventional monetary policy to try to fight unemployment and was an architect of its strategy of using more open communications combined with bond purchases to try to spur growth. She says all the right things about potential bubble risks from the Fed’s easy money policies (“a significant concern that I and my colleagues take very seriously,” as she put in a March speech). But she is not particularly vocal on what those risks are and where they might be bubbling up.
Essentially, the reservations among Obama advisers over Yellen have more to do with what sort of Fed chair they want — what leadership style and intellectual emphasis — than any particular weaknesses that the current vice chairman may have.
Sen. Pat Roberts (R-Kan.) supports Janet Yellen as the next Federal Reserve chair. (Photo by Alex Wong/Getty Images)
Sen. Pat Roberts (R-Kan.) said on Monday that he would support Federal Reserve Vice Chair Janet Yellen as the board's next chair, making him the first Republican senator to publicly come out and back her.
Roberts made his comments in Wichita at the Kansas Independent Oil and Gas Association annual meeting. According to the Wichita Eagle, "Roberts said hesupports Janet Yellen to replace Ben Bernanke when his term as chairman of the Federal Reserve expires at the end of January."
The conservative senator strongly criticized former chief White House economic adviser Larry Summers, who is reportedly one of the frontrunners for the nomination.
"I wouldn't want Larry Summers to mow my yard," Roberts said. "He's terribly controversial and brusque and I don't think he works well with either side of the aisle, quite frankly."
Roberts also said he had some reservations about Yellen, despite his support for her.
“She's very solid in how she approaches fiscal matters, the economy and the Fed, but you need a very strong leader and I'm not sure she has that capability,” he added.
Roberts' office did not immediately return a request for additional comment. His show of support for Yellen adds to the strong backing she has already received from a number of Democratic senators and Democratic women in the House.
More than 30 law and economics professors sent President Barack Obama a letter on Monday urging him to choose Yellen.
Long before becoming Obama's chief economic adviser, Summers served in the Clinton administration, first as a protege of Treasury Secretary Bob Rubin and then as Treasury secretary himself, and helped lead the effort to deregulate Wall Street. Many Yellen supporters are worried that Summers would follow in the footsteps of his mentor and dial back the Fed's efforts to lower unemployment in order to appease the bond market. Yellen, meanwhile, argues that protecting bondholders is not the Fed's only job.
In a private meeting with House Democrats last month, Obama rose to Summers' defense when lawmakers began criticizing his potential nomination.
But in an Aug. 9 press conference, Obama denied that Summers had any sort of "inside track" to the nomination.
"I have a range of outstanding candidates," said Obama. "You've mentioned two of them ... and they're both terrific people. I think 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 preemptively, which is sort of a standard Washington exercise that I don't like ... So I tend to defend folks who I think have done a good job and don't deserve attacks."
"My main criteria for the Fed Reserve chairman is somebody who understands they've got a dual mandate," he added. "A critical part of the job is making sure that we keep inflation in check, that our monetary policy is sound, that the dollar is sound. Those are all critical components of the job ... But the other mandate is full employment. And right now, if you look at the biggest challenges we have, the challenge is not inflation; the challenge is we've still got too many people out of work, too many long-term unemployed, too much slack in the economy, and we're not growing as fast as we should."
http://thelastchanceoffreedom.blogspot.com/2013/08/larry-summers-as-federal-reserve-chair.html
Thursday, August 15, 2013
Larry Summers as Federal Reserve chair
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Why Is the Fed Chairman a Bank Regulator (or an Economist)?Adam Levitin, Credit Slips
Center For American Progress Says Larry Summers ‘Not A Wall Street Guy’ DSWright Firedoglake.
I Know What You Did Last, Summers: The Shady Deals That Will Hand Larry The Fed Mark Ames, NSFW
