MacroScope

Dozens of professors tell Obama to pick Yellen over Summers at Fed

August 19, 2013

More than 30 law and economics professors sent President Barack Obama a letter on Monday urging him to choose Federal Reserve vice chair Janet Yellen to serve as the next Fed chairman instead of former Treasury Secretary Lawrence Summers.

The professors from schools such as Cornell University Law School, Tulane University Law School and Duke Law School praised Yellen’s years of experience as a central banker and said she warned as early as 2005 about the housing bubble. They echoed many of the same concerns that some Democratic Senators have expressed over Summers’ role in preventing derivatives from being regulated and breaking down the walls between investment and commercial banking.

“It is imperative that the person nominated as chair of the Fed was not instrumental in enabling excess and is someone who is perceived as willing to take necessary steps to help prevent future crises,” the letter says.

The professors also highlighted the difference between Yellen and Summers’ temperament. “Yellen is known to persuade with strong arguments, without being argumentative,” said the letter. “Summers… lacks the temperament and judgment essential for the role of the Fed Chair,” it said.

The letter goes on to say: If Summers were to survive a potentially contentious confirmation process in the Senate, it would be at the expense of already waning public confidence in the Fed. “Why take this route when a more qualified candidate is available?”

The letter has also been sent to Senate Majority Leader Harry Reid (who has said he will support Obama’s pick) as well to members of the Senate Banking Committee, which will vet Obama’s Fed nominee. The letter was signed by professors whose work includes corporate governance and financial regulation.

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