Bernanke Fed Successor SmackDown: Janet Yellen Versus Lawrence Summers

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The days of Ben Bernanke as the chairman of the Federal Reserve are looking shorter and shorter ahead of his term expiration in 2014. President Obama has said that Bernanke is likely ready to move on, and after taking over from Alan Greenspan ahead of the Great Recession, it is almost certain that Ben Bernanke is ready to move on as well. The real horse race is who will replace Bernanke as chairman of the Fed. The current belief is that it will boil down to either Lawrence (Larry) Summers  or Janet Yellen.

24/7 Wall St. wanted to look at the pedigree, qualifications and attitude of Summers and Yellen. You should consider that these choices are not set in stone. There is a lot that can happen between now and 2014 that could change the likely successors entirely.

Larry Summers is getting lots of attention after signaling that he would like to be the next Fed chairman, but Janet Yellen is still considered a top candidate and she would be considered the least disruptive to current Fed policy. We have even allowed our readers to contribute “other” answers in our anonymous poll at the end of this comparison and contrast of the two candidates. Lastly, we also gave some outside objective articles for reference for those who want more outside information.

Yellen Image
Dr. Janet Yellen is already the Vice Chair of the Federal Reserve. In 2010 when she became Vice Chair, she began a 14-year term as a member of the Board that will not expire until way out: January 31, 2024. She previously served as President and CEO of the San Francisco Federal Reserve Bank. Yellen also served on the Board of the Fed in the 1990s. She is Professor Emeritus at the University of California at Berkeley and has been on the staff there since 1980. She also chaired the Economic Policy Committee of the Organization for Economic Cooperation and Development (OECD) from 1997 to 1999, and she is a member of the Council on Foreign Relations and also the American Academy of Arts and Sciences.

Yellen’s educational background is as follows: graduated summa cum laude from Brown University with a degree in economics in 1967, Ph.D. in Economics from Yale University in 1971; received the Wilbur Cross Medal from Yale in 1997; an honorary doctor of laws degree from Brown in 1998; and an honorary doctor of humane letters from Bard College in 2000.

Larry Summers Image
Larry Summers has been a very high public appointee before, as Secretary of the Treasury from 1999 to 2001 under President Clinton. Summers also served as Director of the White House National Economic Council under President Obama. He is currently a professor at Harvard University’s Kennedy School of Government and his bio shows that he is President Emeritus of Harvard University as well. He previously served as President of Harvard from 2001 to 2006, but he was forced out after a conflict, ties to derivative losses, and even a controversy about the aptitude of women in science. Summers has also served as Vice President of development economics and chief economist at the World Bank and as Undersecretary of the Treasury for International Affairs.

Summers’ educational background is as follows: bachelor of science degree from the Massachusetts Institute of Technology in 1975; awarded a Ph.D. from Harvard in 1982; became one of the youngest individuals in recent history to be named as a tenured member of Harvard (1983); first social scientist ever to receive the annual Alan T. Waterman Award of the National Science Foundation; awarded the John Bates Clark Medal (1993).

Here are some other observations in a comparison and contrast:

  • Age difference: Yellen was born in August 1946; Summers was born in November 1954.
  • Gender difference: other than the obvious that Yellen is female and Summers is male, Yellen would actually mark the first time that a female has been the Chairman of the Federal Reserve.
  • Families: Both Yellen and Summers are married, Summers has six children and Yellen has one.
  • The Hawk versus the Dove: Perhaps the main difference that stands out is monetary policy ahead. Summers is deemed to be more hawkish on rates, implying that he might raise rates or back off of some of the quantitative easing measures and bond buying faster than Yellen. Yellen is viewed as focused heavily on employment issues, and she is viewed as a continuation of the current Bernanke policies.
  • Regulation differences: Summers was an advocate of deregulation in the financial sector when he was President Clinton’s Treasury Secretary. Yellen is deemed to be in favor of much higher financial regulatory policies now and ahead.
  • Background and experience: Summers has not been a Fed president, but he was Secretary of the Treasury. Yellen is Vice Chair of the Fed now and served as head of the San Francisco Fed.

Outside reading for more background articles:

  • Yellen or Summers: Who’d Be Better at Running the Fed? (Bloomberg)
  • Summers a Bane for Treasury Bonds; Yellen a Boon? (WSJ)
  • Meet Janet Yellen, Who Will Probably Replace Ben Bernanke As Fed Chair (Huffington Post)
  • Larry Summers Fed Nomination Would Bypass ‘Steady’ And ‘Right’ Janet Yellen (Huffington Post)

So, do you want to dare to make a prediction here in an anonymous poll? If yes, then please participate if you have an opinion in the matter. If you think that Ben Bernanke’s successor as chairman will be someone else specifically, feel free to name them in the “other” answer.