Likely Fed pick Yellen seen as independent

From Japan Times
By Jim Kuhnhenn
September 18, 2013

WASHINGTON (AP) – Janet Yellen is now the clear front-runner to be nominated as head of the powerful Federal Reserve, and her status as President Barack Obama’s second choice could ultimately serve as an asset during confirmation and in the central bank’s top job.

Some Fed watchers argue that Yellen will have more independence from the president in the autonomous Fed even as she helps him avoid the bruising and potentially losing confirmation fight he would have had with his first choice, Larry Summers.

Yellen, appointed by Obama three years ago as the Fed’s vice chair, is not as well known in the White House as Summers, a former Treasury secretary who counseled Obama through the economically crucial first two years of his presidency. If Yellen gets the top Fed job, she would be the first woman to hold that position.

Summers withdrew from consideration Sunday in the face of resistance from Democratic critics in the Senate, and by Wednesday the White House was signaling to Senate leaders that Yellen was now the front-runner, according to a senior congressional aide.

In the past, Obama mentioned Donald Kohn, a former Fed vice chair, as a potential candidate. But Kohn, 70, has been considered a long shot. The term for Fed Chairman Ben Bernanke, first nominated by President George W. Bush and then renominated by Obama, will expire Jan. 31.

While Summers would have been a close Obama ally at the Fed, the central bank is an independent agency that is supposed to operate outside the influence of the White House.

“Strangely, this could empower her at the end of the day,” said Cornelius Hurley, a former Fed counsel and now the director of the Center for Finance, Law and Policy at the Boston University School of Law. “All of her colleagues on the board and the Federal Open Market Committee will realize she is not a tool of this administration. If anything, she’s more independent as a result.”

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