Larry Summers vs Janet Yellen in race to replace Bernanke

Major US media outlets are now calling the process to find a replacement for Ben Bernanke as Chairman of the US Federal Reserve a two-horse race, between economists Lawrence Summers and Janet Yellen.

Summers is an Obama insider and former US Secretary of the Treasury under President Clinton from 1999-2001.

Yellen is a former President of the Federal Reserve of San Franciso and a long time Fed insider who has worked closely with Bernanke and his predecessor, Alan Greenspan.

Here's what leading economic analysts, business leaders and politicians are saying about each candidate, from Damien Paletta of the Wall Street Journal:

Julia Coronado, chief economist at BNP Paribas, former Fed staffer
“People know Larry Summers, and Larry Summers is someone who tends to say what he thinks, who thinks he is the smartest person in the room, and that makes market participants very nervous about what he would do at the Fed.”

J. Bradford DeLong, processor of economics, University of California at Berkeley, Summers co-author
“I’m sure [Summers] would do it if asked–he took the NEC job, after all, even though some of us thought it was the wrong job for him, because Obama asked him to. The force of public service is strong in him.”

Princeton’s Paul Krugman
“Appointing Yellen — the first woman Fed chair, and one with utterly unquestioned credentials — would be an evidently historic act. If it’s Summers, you know what everyone will bring up: his pro-deregulation stance of the 1990s.”

Tyler Cowen, George Mason University and blog Marginal Revolution
“It is easier for me to imagine Summers having credibility with a Republican administration, and having a real voice, relative to Yellen. He simply has more right-wing street cred, keeping in mind that Yellen is a former Professor from Berkeley who has never really taken heat from the left, unlike Summers. I think that overall the voice of the Fed within government is a clear positive. The chance of a Republican administration, come the next election, is probably at least forty percent. Thus I would prefer Summers.”

Sheila Bair, former chairman, Federal Deposit Insurance Corp.
“Unlike Larry Summers, Tim Geithner, and other Bob Rubin — minions frequently mentioned in the financial press as potential Bernanke successors — she [Yellen] was not part of the deregulatory cabal that got us into the 2008 financial crisis. In fact, she had a solid record as a bank regulator at the San Francisco Fed and was one of the few in the Fed system to sound the alarm on the risks of subprime mortgages in 2007.”

Credit Suisse research note
“A Summers chairmanship would bring with it more initial uncertainty; the markets know Yellen’s views on monetary policy better than they know those of Summers.”

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More analysis here.