A Federal Reserve chair vacancy

Janet Yellen should be chosen over Larry Summers as the new chair of the Federal Reserve.

Ronald Dixon

This fall, President Barack Obama will select the next chair of the Federal Reserve.

Given an obstructionist Republican Party that will not pass anything remotely Keynesian, Obama must select a successor that will continue to maintain the economy.

In the ring, Obama has two choices: Wall Street favorite Larry Summers or progressive Janet Yellen. Although the president has an extensive history with Summers, Yellen’s strengths outweigh Obama’s personal connections.

Summers did the most damage in the 1990s. As the secretary of the treasury during former President Bill Clinton’s administration, he succeeded in pushing the deregulation of the Glass-Steagall Act. The landmark legislation prevented commercial and investment banks from merging. Unfortunately, the Clinton administration, along with the Republicans in Congress, continued the deregulatory process that began in the 1980s and removed the law from the books.

Citigroup is one of the companies to be formed by merger after the 1998 repeal, and Summers now works as a paid consultant there.

The consequences were staggering. The deregulation of derivatives — along with other tools and assets used by big banks — is one reason why we entered into a recession and still continue to feel aftershocks today.

Yellen predicted many of the economic calamities that began in 2007 when she was president of the San Francisco Federal Reserve. As chairwoman, she would push for keeping inflation up, keeping interest rates low and the program of quantitative easing. Yellen was also named the most accurate economic forecaster by the Wall Street Journal — current Federal Reserve Chairman Ben Bernanke placed fifth overall.

Summers is not the worst candidate Wall Street could produce. However, his deregulatory ideology and the role he played in the destruction of the economy should disqualify him from the position. Moreover, Yellen’s track record would make her a great successor to Bernanke.