More than 350 economists back Yellen for Fed chair

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Associated Press

Posted on September 11, 2013 at 12:00 PM

Updated Wednesday, Sep 11 at 12:02 PM

WASHINGTON (AP) — More than 350 economists have a signed a letter to President Barack Obama calling on him to nominate Federal Reserve Vice Chair Janet Yellen to be the Fed's next chairman. The letter is designed to draw attention back to Yellen amid signs that Obama is leaning toward nominating his former economic adviser Larry Summers.

The letter, whose signers include economists with past ties to Obama, credits Yellen for prescience in warning in 2005 about an impending real estate meltdown, for her consensus style of leadership and for her commitment to job growth.

Obama is expected to announce his nomination as early as this month. Fed Chairman Ben Bernanke's term ends Jan. 31, 2014.

"We believe that Janet Yellen is an extremely effective leader who has demonstrated her capacity to work with the other FRB governors and to bring important perspectives of the American people to her leadership and decisions.," the letter states.

The White House on Tuesday declined to comment when asked about the letter.

Signers include Nobel Prize winner Joseph Stiglitz and Alan Blinder, a former economic adviser to President Bill Clinton and former Fed vice chair himself. Among those who have closer ties to Obama are Christina Romer, the former head of Obama's Council of Economic Advisers; Laura Tyson, a former top Clinton adviser and former member of Obama's Economic Recovery Advisory Board, and Alice Rivlin, a former director of Clinton's budget office and Obama's appointee to the National Commission on Fiscal Responsibility and Reform.

The central bank regulates the supply of money and sets interest rates, thereby influencing economic activity, hiring and inflation. It also is the leading regulator of banks and plays a crucial role as the country's lender of last resort when banks can't get their money elsewhere.

The pro-Yellen letter was organized by Heidi Hartmann, president of the Institute for Women's Policy Research, and Joyce Jacobsen, the dean of social sciences at Wesleyan University.

"The amount of media coverage since Larry Summers' name surfaced has gone in his direction," Hartmann said in an interview. "So we felt her qualifications were being eclipsed in the public eye and we wanted to recall attention to them now and share our professional opinion with the president."

Hartmann said she presented the letter to the White House and top Obama aides Monday evening.

Without mentioning Summers, the letter alludes to his reputation for being prickly and condescending. "There is less and less room in modern public policymaking, especially at the FRB, for a single leader to dominate discussion," the letter said.

Summers served as Treasury secretary under Clinton but forged a bond with Obama as his National Economic Council director when he oversaw the administration's response to the economic and financial crisis and to the bailout of the U.S. auto industry. He has a number of allies among current and past Obama economic advisers.

Yellen became a member of the Fed's board of governors in 1994. Clinton selected her to chair his Council of Economic Advisers from 1997 to 1999. She was president of the San Francisco Federal Reserve Bank, one of 12 Federal Reserve districts. In 2010, Obama selected her as vice chair of the Fed's board of governors, a position she has held since.

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