|MARTIN CRUTSINGER, AP Economics Writer|
This time is different.
A battle over what's arguably the world's most powerful economic post has turned into an unusually public struggle over two renowned economists — Fed Vice Chair
Midler recalled that before the 2008 financial crisis, Summers resisted efforts to regulate the kinds of risky investments that helped ignite the crisis.
Sample Midler tweet: "HUH. The architect of bank deregulation, which turned straight-laced banks into casinos and bankers into pimps, may be next Head Fed: Summers."
That's just the public campaign.
There's also been a whisper campaign suggesting that Yellen might lack the gravitas to be chairman — a job requiring enormous skills of persuasion as well as credibility with fellow Fed officials and global leaders. Yellen's supporters regard such assertions as a sexist attack on someone who'd be the first woman to lead the Fed.
Participants at the
The hallways and grounds of the lodge are where conversation will likely take up the juicier succession battle — something the Fed, which will turn 100 in December, has never before witnessed. The selection of a chairman has long been a matter handled privately by a president and his most senior advisers.
"Most presidents strive for a smooth, quiet transition that doesn't put markets on edge," said
The selections of the three most recent chairmen —
Until a few weeks ago, Yellen, the No. 2 Fed official, was seen as the front-runner, though some thought President
Yet Summers eventually emerged as a strong contender with the backing of senior Obama officials, perhaps including the president. Summers had served in the
By contrast, Yellen isn't well-known outside central bank circles and has yet to play a leadership role during a global crisis.
Her supporters argue, though, that Yellen has played a key if less publicized role at the Fed. She has been its representative at international finance meetings and has helped develop the Fed's plans for responding to a future global crisis.
Summers and Yellen both declined through spokesmen to speak publicly about the Fed post. At
The conference begins with a dinner Thursday night and will end Saturday evening.
Asked about the chairmanship at a news conference this month, Obama defined the main qualification as "somebody who understands they've got a dual mandate" of pursuing low inflation and maximum employment.
On rate policy, Yellen's views are well-known. Investors think she'd maintain Bernanke's drive to support the economy through bond purchases and other steps to keep borrowing rates low until the economy has strengthened further.
"She's the candidate of continuity," said
Still, analysts say they'd be surprised if Summers, as Fed chairman, strayed from the Bernanke-Yellen approach. Republicans have often attacked Bernanke's low-rate policies by arguing that rates kept too low for too long could destabilize markets and trigger high inflation.
Where Yellen and Summers might differ is on regulation. The Fed is charged with overseeing the nation's biggest banks and implementing stricter rules imposed by the Dodd-Frank Act, which aims to curb the abuses that helped ignite the 2008 crisis.
Both have backed tighter regulation. But Summers' critics argue that he's established ties to big banks and might be overly sympathetic to their priorities. After leaving the Obama administration after 2010 and returning to
And as Treasury secretary, Summers backed legislation that erased boundaries between commercial and investment banking. Critics believe that change let banks make riskier bets that led to the crisis.
Summers' supporters say his thinking on deregulation has evolved since the crisis. They note that he supported tighter rules that ended up in Dodd-Frank.
"Larry was strongly supportive of our efforts to put tough new rules in place to reform the financial sector and protect consumers," said
His allies also contend that a Fed chairman with experience on
Analysts don't expect any reversal of the tighter regulation brought by Dodd-Frank — whether Summers or Yellen is chosen to lead the Fed.
"The memories of the crisis are too fresh for a change," said
This summer, about a third of Senate Democrats signed a letter urging Obama to choose Yellen. When the president was pressed by congressional Democrats about a possible Summers chairmanship, he defended him. Obama said the criticism of Summers struck him as an example of someone "getting slapped around in the press for no reason" before any nomination.
The decision may come down to which person Obama feels most comfortable with. That edge could go to Summers, given his long-standing relationship with the president.
Then there's the gender issue. A Summers pick would mean Obama had bypassed someone who would have broken a barrier if she'd become the first woman to lead the Fed. It would also mean he had chosen someone who upset women when he questioned their innate skills in math and science — comments that contributed to Summers' forced resignation as
While Yellen is credited with building consensus as head of the
Obama has said he'll make his decision in the fall. He'll then face the prospect of resistance from Senate Republicans who have grumbled about the Fed's low-rate policies. Bernanke was approved by the
Any sign that a confirmation might be in jeopardy could spook investors.
"If politics gets in the way of confirmation of the president's choice, then we could see a major undermining of market confidence," said
AP Business Writer
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