There was a time, long ago, when some still believed the myth that the Federal Reserve, and the selection of its Chairman, were supposed to be apolitical and impartial. Luckily, that was a long time ago, because otherwise some may question not only the logic, but the motives, behind what the media reports is an aggressive push by White House officials to "muster support among Democrats on the Senate Banking Committee to back Federal Reserve Vice Chair Janet Yellen," according to Reuters which cited three sources said on Friday, laying the groundwork for her expected nomination to the Fed's top job. If the White House is suddenly intent on picking Mrs. Yellen (or is that Mister? [13]), one wonders just how diluted her "runner up" credibility at the Fed would be, since it has been made quite clear she was continuously Obama's B (or lower) grade choice to head the Fed, with Summers at the very top. And of course, a just as important question is how even more diluted is Obama's credibility and political brand if a few ultra-liberal Senators can impose their choice for next Fed head over that of both Larry Summers, of the "Committee to save the world [14]" and the president himself.
From Reuters [15]:
Two Senate Democratic aides, who requested anonymity, said officials had encouraged senators to support Yellen and talk her up, hardening the sense that President Barack Obama has settled on her to replace Fed chief Ben Bernanke when his term ends in January.
A third source familiar with the calls said the White House had reached out to some of the 20 Democratic senators who had signed a letter to Obama in July urging him to appoint Yellen, who would be the first woman to hold the job if confirmed by the Senate.
This source said the White House had not communicated that Obama had made a decision on who to nominate, but wanted to make sure any negative reports about Yellen did not go unanswered.
The outreach to Capitol Hill indicates a serious effort to make sure her confirmation would run smoothly. A White House official said earlier this week that Yellen was the leading candidate.
The third source said the calls were mostly at the staff level, although some senators may have been contacted directly.
Obama, who leaves on a week-long tour of Asia on Oct. 6, is expected to announce his decision in the coming weeks.
With Democrat support for Yellen in the bag, it is unclear if the political soap operate that the Fed chairman nomination has become, will get the required 6 Republican votes to streamline Yellen's nomination.
Yellen, who is seen as one of the most dovish Fed officials, is likely to enjoy solid backing from Democrats, but could draw some fire from Republicans worried that the central bank's aggressive efforts to spur stronger economic growth could fuel inflation or asset bubbles.
Democrats control the Senate 54-46, but any nomination is likely to need to secure 60 votes to overcome procedural hurdles. Republicans have not indicated whether they might seek to block a Yellen nomination.
Procedural hurdles or not, Yellen now seems to see herself in fast track mode. As was reported late last night [16], she "postponed a speech next month to the Economic Club of New York, the club said today, as her prospects of becoming the next Fed chairman gained. Yellen’s planned appearance Oct. 1 “will be rescheduled,” the club said in an e-mailed statement. “We will return any advance payments.”
In other words, unless some epic skeleton emerges out of the closet and Bill Dudley somehow surges to the top of the Dark Horse rankings, Yellen may be the new very political head of the Fed.