The White House will not announce its nominee to lead the Federal Reserve until the fall, a senior administration official said Friday, after a week of frenzied speculation over whom the pick might be.
The official, who requested anonymity to discuss personnel issues, said President Obama has not made his decision. However, the choice seems to have narrowed to Janet L. Yellen, who holds the No. 2 position at the nation’s central bank, and Lawrence H. Summers, who was one of Obama’s closest economic advisers and Treasury secretary under President Bill Clinton.
Both have ardent supporters in Washington — albeit from different corners — that make Obama’s decision especially difficult.
Several Senate Democrats signed a letter sent to the White House Friday endorsing Yellen for the post. The letter cited her long career at the Fed and her close work with the current chairman, Ben S. Bernanke. It also noted that she was among the first to identify the threat to the economy from the collapse of the housing market.
“This prescience speaks to her independence, intellectual rigor and willingness to challenge conventional wisdom regarding deregulation — essential traits for a successful Fed Chairman,” the letter states.
The rally around Yellen followed rumors that Summers had become the leading candidate. Summers helped craft Obama’s stimulus programs as director of the National Economic Council and consulted on issues ranging from trade agreements to banking regulation. Both candidates are highly respected academic economists and probably would continue the Fed’s focus on bringing down unemployment.
The next head of the Fed would be responsible for overseeing the central bank’s transition out of crisis mode and into more traditional monetary policy. The Fed has kept interest rates close to zero for five years and is spending $85 billion on longer-term bonds each month to push mortgage and other interest rates down.
The foremost task facing the nominee would be winding down the bond-buying program and raising interest rates without spooking markets. The Fed also is still crafting regulations required by the 2010 financial reform law to strengthen the nation’s banks.
Bernanke’s term as Fed chairman ends in January, and he has remained silent about whether he will remain in his post. But he has pointed out that others are well equipped to manage the central bank’s exit from unconventional monetary policy, and Obama has said that Bernanke has been in the job longer than he intended to be.
Many analysts say the choice for Obama comes down to personality. The president has worked with Summers closely, but nominating Yellen would make history — no woman has ever been at the helm of the Fed.
“It’s really a matter of who he’s most comfortable with,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and a former adviser to Vice President Biden.