Monday, September 16, 2013

Federal Reserve Nomination

It's been five years since the subprime mortgage implosion of 2008, as bank after major bank found itself collapsing at a time when the economy was still reeling from the accounting scandals of the century. While some of the banks involved in the financial mess dug their way out of the trenches, the recovery prognosis is still dire. 

First there is the debate over who should replace Bernanke, the Federal Reserve chief. As of recent there were two top contenders, Janet Yellen who serves now as vice-chairman of the Reserve, and Larry Summers, who worked with the Treasury and who was President Obama's first choice for the position. The media reported over the weekend that Summers is now out after caving in to criticism from the left. Yet Yellen's position has not been secured, as President Obama continues to consider other potentials. 

One of those is Timothy Geithner, who was Federal Reserve president in New York during this trying time. He, along with other economic decision makers  faced criticism for saving the banks involved in the financial crisis.  Rumor has it Geithner has already turned down the job, although it's not unusual to see these policymakers change their minds when the pressure is on. 

How Geithner would benefit as Reserve chief remains to be seen. Five years after the crisis, the economy has not improved to the level many politicians had rallied behind. Job creation is weak, unemployment is still high - although gradually declining - and the public's mistrust in our government's leadership ability is at a higher level than that since 2008. 

A new Gallup poll reveals that 29 percent of Americans are still worried about losing their jobs. That's almost double the findings of 2008. Imagine that. After bailing out the "too big to fail" banks, the stimulus packages, tax incentives, and the government's attempts to suppress inflation, 29 percent of Americans are still concerned and with good reason. We still have troops in Afghanistan, contemplating strikes on Syria, still debating whether the Fed should lay off the asset buying strategy. There is still too much uncertainty to not not care, which is why the new appointment of Federal Reserve chairperson is so critical. Whoever is bold enough to sit in that turbulent chair will face plenty of pressure to haul the economy out of the murky waters of the past five years. Which is why President Obama is probably taking his sweet time to appoint one. 

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