(MoneyWatch) Although the White House said today that President Barack Obama won't name a new Federal Reserve Chairman until the fall, the contest to succeed current chief Ben Bernanke is in full swing. Backers of former U.S. Treasury Secretary Larry Summers and Fed vice chairman Janet Yellen have taken to Congress and the media to tout their candidate.
Some reports suggest the White House favors Summers to lead the central bank, while many liberal lawmakers are backing Yellen. Conservatives in Congress generally oppose the idea of Summers getting the job.
Summers led the Treasury Department during the last two years of the Clinton administration and was director of the National Economic Council during the first two years of the Obama administration. In that last role, he helped shape the president's response to the financial crisis. He is also reported to maintain close contact with the president and his top economic advisers.
Yellen is a long-time Fed insider who has worked closely with Bernanke for years. She has been a key player in drafting the Fed's easy-money policies and played a key role in the central bank's response during the height of the financial crisis.
The active campaigning by Summers' and Yellen's respective supporters belies their similar backgrounds and outlooks on monetary policy. In addition to being Ivy League-educated economists, they also both worked in the Clinton administration. In heading the Fed, both would likely focus policy on fighting unemployment while keeping inflation low.
Yellen served as a member of the Fed's board of governors from 1994 to 1997 when President Clinton appointed her to chair the Council of Economic Advisors. She served as president of the San Francisco Fed from 2004 to 2010, when she was appointed to her current position. Yellen is known for her low-key manner, as well as her determination when it comes to fighting for her policy positions. Along with her training in economics, Yellen is said to have a deep knowledge of the central bank's culture and inner workings.
A lot of time at the Fed goes into reaching consensus on major decisions. That's because conflict at a central bank, especially the U.S., can unsettle financial markets.
During his time at Treasury in the 1990s Summers was instrumental in repealing the Glass-Steagall Act, the Depression-era law that prevented commercial banks from engaging in investment banking. Experts cite financial deregulation as one cause of the financial crisis and the creation of too-big-to-fail megabanks.
In recent weeks, several liberal and conservative senators have called for the return of Glass-Steagall, something Summers still opposes. Also, his stormy five-year tenure as president of Harvard University was marked by controversy and drew a lot of attention for his confrontational management style.
Not surprisingly, Summers is drawing attacks from both the left and the right. In addition to the letter circulating among Democratic senators, liberal advocacy group Moveon.org is collecting signatures for a petition titled, "Don't let Larry Summers head the Fed."
In an unusual alliance for groups that are ideological foes, that position is supported by the American Enterprise Institute. James Pethokoukis, a columnist for the conservative think-tank, recently wrote, "Summers [would] be a caretaker chairman who won't get another term if a Republican wins the presidency in 2016. The political case for a Summers-led Fed is weak. The policy case even weaker."
The arguments aren't all just against Summers. Former FDIC head Sheila Bair recently highlighted Yellen's accomplishments in a recent column for Fortune:
"Unlike Larry Summers, Tim Geithner and other Bob Rubin -- minions frequently mentioned in the financial press as potential Bernanke successors -- [Yellen] was not part of the deregulatory cabal that got us into the 2008 financial crisis. In fact, she had a solid record as a bank regulator at the San Francisco Fed and was one of the few in the Fed system to sound the alarm on the risks of subprime mortgages in 2007."
For all the antagonism to Summers outside the White House, President Obama is said to like him. In the end, that may be the only vote that matters.