(Editor’s Note: In this post written at the outset of speculation over the next leader of the Fed, we looked at the background of a candidate who has now moved to the forefront with the withdrawal of Larry Summers.)
With Federal Reserve Chairman Ben Bernanke’s term expiring at the end of January 2014, attention is turning to Vice Chair Janet Yellen as a possible successor.
She hardly has a lock on the job. Bernanke could re-up. A former Treasury secretary, either Tim Geithner or Larry Summers, could be named. The Fed could tap a former Fed vice chairman, Donald Kohn or Roger Ferguson. William Dudley, the New York Fed chief and former Goldman Sachs economist, is also in the mix.
It is Yellen’s name, though, that surfaces most often. At a recent conference sponsored by International Strategy & Investment, about two-thirds of the attendees polled picked her, followed by less than a fifth naming Bernanke and even smaller numbers choosing other candidates.
So, for sake of preparedness, here are 10 things you should know about Yellen, who could be setting your interest rates a year from today.
1. If nominated and confirmed, she would become the first female chairperson in the history of the Federal Reserve, which was founded in 1913.
2. She is a dove on monetary policy, which means she is—at least for now—more worried about high unemployment than an outbreak of inflation.
3. She’s a Fed veteran, with on-and-off service dating back to her first stint as a staff economist in 1977-78. She was on the Board of Governors once before, in the 1990s. She’s also been president of the Federal Reserve Bank of San Francisco—meaning she has experience in both parts of the Fed system (Washington and the regional banks).
4. She was early to spot trouble in the housing market. In 2007 she compared housing troubles with a 600-pound gorilla in the corner of the Fed’s meeting room.
5. She believes that raising interest rates is a “blunt instrument” for preventing asset bubbles from forming when the economy is weak and would rather rely on “supervision and regulation as the main line of defense,” as she said in an April 16 speech.
6. She’s a brilliant economist—emeritus at the University of California at Berkeley—who has written about such topics as causes of unemployment, income inequality, the value of trade liberalization, out-of-wedlock childbirth, and East Germany.
7. She is married to and writes frequently with George Akerlof, who won a Nobel Prize in economics in 2001. In a touch of romance that only an economist could appreciate, they fell in love over discussions in the cafeteria of the Fed, where they were both working.
8. Her lecture notes from a class she took with Yale economist James Tobin—a Keynesian who also won a Nobel Prize—were so clear that generations of graduate students relied on them as study guides.
9. She’s from Brooklyn. (Yo!) She graduated from Fort Hamilton High School in Bay Ridge, the same school that produced NBA Hall of Famer Bernard King.
10. She chaired the Fed subcommittee that recommended more transparency—which led the Fed to adopt a detailed public plan for the circumstances under which it will start withdrawing monetary stimulus.
Bonus: In the New York Times’s profile of Yellen, a colleague described her as “a small lady with a large IQ.”