In a meeting with Democrats on Capitol Hill on Wednesday, President Obama reportedly mentioned three, and only three, names in discussing his job to select a nominee to lead the Federal Reserve. The relative merits of Larry Summers and Janet Yellen have been widely discussed. Less so the third name: Donald L. Kohn.
So, who is Don Kohn, and what would be his strengths and weaknesses if the president were to nominate him to succeed Ben Bernanke? Here's what you need to know.
He was Bernanke's No. 2 during the financial crisis. Kohn was vice chairman of the Fed from 2006 to 2010, which put him at Bernanke's side for many of the biggest, hardest decisions the Fed had to make during that era. When Fed leaders had to decide in the wee hours of the morning whether to bail out this investment bank or that insurance company, Kohn played a major role is sorting through the decisions. That could cut both ways in evaluating a nomination; on one hand, his credentials as a crisis manager are impeccable. On the other, he bears part of the responsibility for unpopular bailouts of AIG and other firms assisted by taxpayers during the crisis.
He is the consummate Fed veteran and was Alan Greenspan's right-hand man. Kohn spent 40 years at the Fed, only the last four of them as vice chairman. Before that, he was the closest adviser to Bernanke's predecessor, Alan Greenspan. First as head of the powerful monetary affairs division of the Fed staff and then as a counselor to Greenspan, he was often the only other person in the room when Greenspan was thinking through where to take U.S. monetary policy. "Don is the most important nonchairman member of the board in the history of the Fed,” Laurence Meyer, a former Fed governor, once told the Wall Street Journal.
He was a reluctant supporter of unconventional policy. Kohn has supported Bernanke-era policies, including the financial rescues of 2008 and quantitative easing to support the economy in 2009 and 2010. But he was often a small-c conservative voice within Bernanke's inner circle, urging caution and watching for unintended consequences. Indeed, in internal debates when Kohn was successfully persuaded to take a course of action, it was taken as a sign that all the ramifications had been properly evaluated.
He would be the oldest newly appointed Fed chair. Kohn is 70 years old, which would make him the oldest person to be newly appointed to the job. (Greenspan served well into his 70s, but was first appointed at a youthful 61). By comparison, Yellen is 66 and Summers 58. Kohn is in good health by all outward appearances.
He is apolitical. Kohn was appointed to the Fed board of governors by George W. Bush at the urging of Greenspan, but he has never served in an administration or evinced any political inclinations. Yellen and Summers have both served in Democratic administrations (Summers more recently, as head of Obama's National Economic Council). That could make Kohn an easier swallow in confirmation hearings for Senate Republicans who might be uneasy with someone they view as loyal to the White House.
He retired three years ago but has stayed in the game. Kohn joined the Brookings Institution as a senior fellow after retiring from the Fed in 2010. But he soon took on a part-time job that has kept him in the mix of global policymaking. He is a member of the Bank of England Financial Policy Committee, in which he spends significant time in London helping to guide the Brits' approach to regulating their banking and financial system.
He is well-known and highly respected among the international community of central bankers. As his Bank of England appointment reflects, Kohn is very much part of the global central bankers' club, often having represented the Fed in international settings. He would have no adjustment period in learning the diplomatic and global aspects of the Fed job.
He bikes to work, lives modestly and leads one tough hike in the mountains. Kohn lives in Annapolis, and when he was working long hours as Fed vice chairman would often stay in his son's basement apartment closer to the city during the week and bicycle into work. At the Kansas City Fed's annual economic symposium in Jackson Hole, Wyo., each August, Kohn leads a rigorous afternoon hike after the Friday sessions are done. It leaves economists and central bankers winded by the end, and is thus jokingly called "Don Kohn's Death March."