Does It Matter Who Leads the Fed? Yes and No

From FOX Business
By Dunstan Prial
August 28, 2013

Does it really matter who President Obama nominates to succeed Ben Bernanke as chairman of the Federal Reserve?

Well, yes and no.

Yes because whoever is chosen will bring their own leadership style to the immensely powerful position and that style will undoubtedly influence and color the entire institution. And no because the Fed’s mandate for the next few years — winding down the extraordinary measures put in place in the wake of the 2008 financial crisis — isn’t likely to change much regardless of who Obama nominates.

The two leading candidates to replace Bernanke when his term ends in January couldn’t be more different: current Fed Vice-Chair Janet Yellen, the quiet academic seen as a behind-the-scenes consensus builder, and the brash Larry Summers, a consummate Washington insider known for ruffling feathers wherever he’s perched.

Yellen is widely seen as Bernanke’s natural successor, a veteran Fed hand who not only agrees with Bernanke’s interventionist monetary policies but who would also maintain what might be Bernanke’s primary legacy – the dramatic increase in transparency at the once-insular central bank.

Summers, a former Treasury Secretary under President Bill Clinton and top economic advisor during Obama’s first term, isn’t known as a consensus builder. Rather he’s recognized as an uncommonly brilliant economist who strongly trusts his own instincts, a potentially problematic trait given the collegial atmosphere Bernanke has fostered at the Fed.

Mark Williams, a former Fed examiner who now teaches banking at Boston University, said the Fed chief’s personality and leadership style play a big role in how the Fed is viewed by global markets.

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