Tuesday, August 25, 2009

Quick note on Bernanke's reappointment 

I got called on this by a news outlet, so some of you may hear me on radio today about him. Generally, I thought he was the best choice of those who were considered the closest competitors. I really thought Summers was a bad idea as being too close to the Obama White House and rather difficult to have in a consensus-building role. Janet Yellen was an insider choice, but she really doesn't have anything Bernanke doesn't have now. If you are going to change horses in the middle of a recession, it should be for something notably better. She's not worse, she might be better, but "notably" is a significant hurdle. I think the same would apply to any of the others (my dark horse was Bernanke's colleague and former Fed governor Alan Blinder, but dismissed the possibility quickly when I thought about Yellen.)

The better question is really why now? Why reappoint Bernanke five months ahead of schedule, while President Obama is supposed to be vacationing? My only answer is that the Administration wants his position secure as they prepare to restructure financial regulation. I think it makes it more rather than less likely that the Fed is getting the keys to a new souped-up regulatory machine. More on whether I like that or not when we get closer to having a proposal from Congress.

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