Dear Mr. President: Name Yellen now!September 16, 2013: 1:34 PM ET
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.
So now it's up to President Obama to do the right thing, and make the choice he should have made all along. It's time to forget about politics, cronyism and sticking it to rivals. Appoint Fed vice chair Janet Yellen to replace her boss Ben Bernanke.
Yellen is extremely qualified for the job. Her resume speaks for itself. And as my Fed expert colleague Annalyn Kurtz (take that Hilsenrath!) has pointed out on several occasions, Yellen deserves credit for being more worried than many of her Fed colleagues about the housing bubble before the financial crisis and Great Recession.
She also provides continuity. The transition from Bernanke to Yellen would be pretty seamless. We already know that Yellen is on board with Bernanke's easy money policies.
So when the Fed does actually start to cut back on its bond purchases -- maybe not Wednesday but, to paraphrase Casablanca, soon and for the rest of QE's life -- who better than Yellen to be in charge of continuing to unwind the trillions of assets on the Fed's balance sheet? She'd likely do it in an orderly fashion and telegraph every move to the markets just like Bernanke.
One hopes that the president will come to the same conclusion. But I'm disturbed by chatter that Obama may want to find yet another alternative candidate to Yellen. Perhaps Donald Kohn, Yellen's predecessor as Fed vice chair. Or maybe former Obama Treasury Secretary Tim Geithner ... despite reports that Geithner is not interested in the job.
The rationale is that the president does not want to be perceived as quickly acquiescing to Senate Democrats that were opposed to Summers. In other words, naming Yellen now may weaken Obama politically.
To that I say, tough luck. The president's decision should be based on what's best for the economy for the next few years. It should not be a petty power move.
In case the president forgot, the new Fed chair is likely to stick around in Washington after Obama is gone. The Fed job is a four-year term. So it won't expire until the end of January 2018. At that point, there will be a new president. And he or she may decide to appoint someone new.
But if recent history is any guide, even the next president (regardless of whether they are Democrat or Republican) will not want to mix things up.
Since 1951, there have only been six Fed chairs. Just one Fed chair has served fewer than two terms in the past half century: William Miller during the Carter administration. And the reason he left that position was because Carter appointed him as Treasury Secretary. The only job with more security is coach of the Pittsburgh Steelers. (Although the Steelers lost to the Bengals on Monday Night Football and have fallen to 0-2. Will Mike Tomlin have to watch his back? I digress.)
The Fed chair decision should be above politics. Paul Volcker served under Carter and Reagan. Alan Greenspan was Fed chair during two Republican administrations (Reagan and George H.W. Bush) as well as during the entire eight years of Bill Clinton. George W. Bush appointed Bernanke to his first term ... and Obama nominated him again.
It would be a shame if the president now suddenly decides that he'd rather stick it to rivals (in his own party no less!) than name the one person who has already received strong endorsements from lawmakers, fellow economists and investors.
Yellen is the clear choice to take over the Fed from Bernanke. The only reason for Obama to not select her is because he's more interested in short-term political points than doing what's best for the long-term health of the economy and market. Here's hoping that he makes the right decision.
But others had some good suggestions as well.
Hard to dispute what Lou Gerstner did at IBM (IBM). Big Blue is definitely in better shape because of him. Little confused by the Microsoft (MSFT) reference though. Do you think Gerstner should be considered to replace Steve Ballmer? Or that Microsoft needs a Gertner-esque person to take over? Lots of people agree with that.
Wow. That's a bold call. Hesse clearly had a huge mess to clean up when he took over at Sprint (S) in 2007. The Nextel merger, which he inherited, was a disaster.
But Sprint still trails Verizon (VZ) and AT&T (T) in the wireless market share race. Then again, Sprint is no longer bleeding as many subscribers. It offers Apple's (AAPL) iPhone. (More curse than blessing these days?) And he did get SoftBank to spend more than $20 billion for a controlling stake in Sprint ... while still keeping his job.
Still think it's a stretch to say he's the best CEO ever. But he's pretty darn good.