There will be a record number of women in the Senate next year—a testament to their growing political influence—and with Obama’s reelection there’s a chance that we could have the first woman chair of the Federal Reserve. The four year term of the current chairman, Ben Bernanke, is over on January 31, 2014, and it will mark the end of his second four year term as chair. He is eligible to serve a third term, but he has hinted that he may not seek reappointment. And even if he does seek a third term, President Obama may not want him to continue as chair of the Fed.
But although there has been quite a bit of speculation over who will replace Bernanke, he has not yet said that he will definitely step down, and Obama has not said what he intends to do. There was a time when it looked likely that Obama would choose a new Fed chair, but
Bernanke’s recent success at convincing other members of the Fed to support another round of quantitative easing placated some critics on the left who were calling for his head. So he may be reappointed to a third term after all. But if he is replaced, and there’s a reasonable chance he will be, I believe that the current vice chair of the Federal Reserve, Janet Yellen, is the most likely nominee.
Janet Yellen is the logical choice for several reasons. First, her views on how monetary policy should be conducted are close to those of Ben Bernanke. This is important because financial markets do not react well to change and uncertainty, and it provides the continuity that they seek. It also gives Chairman Bernanke assurance that policy is in good hands, assurance he might need before he’d be willing to step aside. Second, she is also highly experienced. She was president of the San Francisco Fed, and she is presently the vice chair of the Federal Reserve System. Third, her academic credentials are very strong so she’ll be able to handle the academic heavyweights on the bank’s monetary policy committee. Finally, there are also political advantages for Obama if he appoints the first woman as Fed chair.
And this is not the only opportunity Obama has to appoint a woman to head an important financial agency for the first time. There has never been a female secretary of the Treasury. Like Bernanke, the current secretary, Tim Geithner, has hinted that he will step aside for Obama’s second term. If so, Obama could appoint Sheila Bair to replace him. She has often been mentioned as a potential replacement for Geithner, but her recent book on the financial crisis may have irritated too many powerful voices in Washington for that to happen. However, she’s not the only woman who could do this job.
The question is, will President Obama be the first to recognize that males are not the only ones qualified to run our two most important financial agencies?