Summers’ Day?

Why are folks so worked up over Ben Bernanke’s successor?

We’ve seen extensive stories in every major news publication over the past week. First, Yellen is a shoe-in. Then she’s favored due to her gender. No, it’s the other way. Then Summers is the front-runner. Then he isn’t. It’s enough to make you cry “Volker!”

The Federal Reserve Board Chair is a very powerful person. Monetary policy matters. Getting it wrong arguably led to the Great Depression in the ‘30s and the Great Inflation of the ‘70s. Managing the transition from super-low to normal interest rates is really, really important.

It’s not about the issues. Summers’ stances on the stimulus, deregulation, and Dodd-Frank aren’t out of the mainstream. But he has a reputation as an imperious egoist, the smartest person in the room who’s not interested in debate. Even his supporters admit this.

The Fed is a collegial, consensual body charged with multiple, conflicting goals. Alan Greenspan extinguished dissent over three decades and it didn’t end well. Bernanke’s successor needs to work well with others.

Douglas R. Tengdin, CFA

Chief Investment Officer

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