The campaign for who will be the next Fed chairman is now well under way. The front runners are Bernanke, Summers, and Yellen with an occasional nod to Blinder. In my opnion, we should immediately cross off the first two. The choice is really between Yellen and Blinder. What has Yellen done recently? The highly successful and popular “Cash for Clunkers” programs is a very pragmatic and smart solution to a real problem. This is Blinder’s baby and he should hire some lobbyists or something to help him market that fact. Everyone knows the “Cash for Clunkers” program but how many people know that Alan Blinder is the guy behind it and how many of those people know that Bernanke’s term at the Fed is ending and Blinder is a candidate to replace him?
Being smart is not good enough. Alan Blinder needs better marketing if he wants to be the next Fed chairman. I think he should be.
It didn’t take a crystal ball to see that the jockeying for who will be the next Fed Chairman would begin to heat up. On June 15, I pointed out that the assumption going around has been that either Bernanke will be reappointed or Summers would take over the reigns. In light of blistering testimony today, it is increasingly clear that Bernanke will not be reappointed. I can’t see Summers as Fed Chairman either. I do see Alan Blinder. I started my personal lobbying campaign for Blinder on June 16. He is the only sensible choice.
Now it seems to be within the realm of possibility that Geithner and Bernanke are both in jeopardy.
President Obama, here is what you need to do.
It should be obvious to you by now that Geithner is incapable of instilling confidence. He may or may not be competent, but that is less important than having the ability to instill confidence.
Although I am no fan of Summers, I think most people would agree that he is a natural choice for Treasury Secretary. After all, the transition will be seamless since he is basically running things already from behind the scenes.
That leaves Alan Blinder for Fed Chairman.
Now, if you really wanted to salvage your presidency (you know your political capital is waning quickly and you will need it for your other programs), then you might also consider appointing Volcker to head the NEC.
This dream team would instill tremendous confidence and I would once again be optimistic about the future of our economy:
- Secretary of the Treasury – Larry Summers
- Chairman of the Federal Reserve – Alan Blinder
- Director of the National Economic Council – Paul Volcker
This is a team that could carry us out of this crisis. It is not too late.
PS: Don’t let the recent jubilation fool you. As I told you before, the credit crisis is much larger than residential mortgages. Easy credit pervaded every aspect of the debt markets. We need to be prepared for the next round. The troubles have still only begun.
PPS: You might also kindly request that Greenspan shut up.
Yesterday, I started a personal campaign to nominate Alan Blinder to be the next Fed Chairman in the hopes that someone picks up the torch and carries it further than I can.
Today, a story appeared on Bloomberg confirming my fears:
Lawrence Summers, the former Treasury secretary who heads Obama’s National Economic Council, has been mentioned as a possible successor should Bernanke not be re-nominated.
It would be a tragedy if that happens.
Speaking of a “voice of reason”, I stumbled onto a very good Charlie Rose segment from last week with Alan Blinder, Alan Auerbach, and David Leonhardt:
Alan Blinder would make a fantastic Fed Chairman.
Bernanke’s term as Chairman of the Federal Reserve ends on January 31, 2010. There seems to be a silent understanding that there are two possible outcomes:
- Summers slips into the role
- Bernanke stays
Both of these outcomes would be dreadful. It is not too early to start making noises now. The one person that stands out in my mind who should be the next Fed Chairman is Alan Blinder. Hands down. Throughout this crisis, he’s been a voice of reason. Bernanke, on the other hand, has been a bumbling disappointment.
I hope we can start a discussion early so that people are well informed ahead of time. These are challenging times and we need someone at the Fed we can feel confident about.
My vote would be to nominate Alan Blinder for Chairman of the Board of Governors of the Federal Reserve. Help make it happen.