Christina Romer for San Francisco Fed chief? Just maybe
By Neil Irwin
Once Janet Yellen is confirmed to be vice-chairman of the Federal Reserve--she glided through her confirmation hearing two weeks ago and seems on track for easy confirmation, though with the U.S. Senate you never know--another of the most important jobs in the Fed system will become vacant.
Yellen will leave behind the presidency of the Federal Reserve Bank of San Francisco, a plum position: It has a long tradition of presidents who are influential shapers of monetary policy, its district encompasses the entire western U.S. and more people than any other Fed district, and it regulates dozens of major banks, including the nation's fourth largest, Wells Fargo. And hey, San Francisco may have the nicest climate of any city with a Fed regional bank.
So who's in line for the job? In Washington, the most widely discussed candidate is Christina Romer, currently chairman of the Council of Economic Advisers in the White House. By all accounts she is enjoying the White House job, but there are several reasons that an appointment to the San Francisco Fed would make sense from a personal perspective: Romer has always viewed her Washington stint as a temporary affair, her teenage son begins high school this fall, and her husband David Romer went on leave from his post at Berkeley to come to Washington (he has been working at the International Monetary Fund).
And there are even more reasons that the San Francisco Fed might be interested in her: She is a first-rate academic, one of the leading scholars of macroeconomic history. She has deep ties to the bay area, having taught at Berkeley since 1988. And since coming to Washington at the beginning of 2009, she has gained considerable experience in the policy-making world, which she previously lacked. Add to that, Fed Chairman Ben Bernanke has a lot of respect for her, as do her Obama administration colleagues.
So what are her chances? The big complication is that it it's not a decision that Bernanke or Obama gets to make. The board of directors of the San Francisco Fed must choose its new president, subject to the approval of the Fed board of governors in Washington. And it is an opaque process. A San Francisco Fed spokeswoman confirmed to me on Monday that a search committee has been formed, but she wouldn't say who is on it. She said an executive search firm has been hired to conduct a "nationwide search", but she wouldn't name the firm or describe the timing or methodology of the search.
(Here are two names of people likely to be heavily involved in the search, though: The newly named chairman of the San Francisco Fed, real estate investor Douglas W. Shorenstein, and the new deputy chairman, Chevron Corp. chief financial officer Patricia E. Yarrington).
To people in the economic policy world, especially from a vantage point on the east coast, a Romer appointment looks like a no-brainer; there's little doubt that she would emerge as an influential member of the Fed's monetary policy committee if appointed. But when a board gets behind closed doors, there is no telling what could happen. Perhaps they want to promote an internal candidate, such as the San Francisco Fed's respected research chief John Williams. Or perhaps, given the Fed's regulatory failures in the run-up to the crisis and expanded responsibility for financial stability in just-passed legislation, they will seek someone with a strong background in bank regulation, which Romer lacks. Now it's just a waiting game to see what they do.
An aside: Appointing Romer would follow in the Yellen tradition in more than a few ways. Yellen also had previously served as chairman of the Council of Economic Advisers, from 1997 to 1999. She was also Berkeley professor for many years before going into government--and, like Romer, Yellen is married to a top-notch economist at Berkeley, Nobel laureate George Akerlof.
July 27, 2010; 10:20 AM ET
Categories: Federal Reserve
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