Janet Yellen (PETER PARKS/Getty Images/AFP)
WASHINGTON -- The rap against Janet Yellen during the ugly public Fed feud over who should be the next chairman of the nation's central bank was that her chief rival would make a better crisis manager during these tumultuous financial times.
True, former Clinton Treasury Secretary Larry Summers had experience managing the 1997 Asian currency crisis that threatened a global meltdown. And again as President Obama's chief economic adviser, he helped confront the economic collapse here at home.
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But now that President Obama appears to have settled on Yellen, don't underestimate her ability to show the old boys' club of banking that just because she's a woman, it doesn't mean she isn't an equal as a crisis manager.
Consider that as president of the San Francisco Fed branch from 2004 to 2010, she was a leading voice in setting the central bank's policy during the 2008 financial crisis and the Great Recession it begot. Yellen was prescient in arguing in late 2007 that the financial system was headed for danger and later prodded the Fed to take extraordinary measures to bring the world economic system back from the brink of collapse.
Even as some Fed members were downplaying the crisis and worrying about inflation, Yellen made a strong case for it to continue its unprecedented stimulus programs because the economy was too weak to stand on its own. When she became vice chairwoman of the Fed in 2010, she worked closely with Fed Chairman Ben Bernanke to continue that policy.
To date, the record shows she has been right: The economy averted a depression and is slowly gaining strength without a whiff of inflation on the horizon.
It takes temerity to stick to that course in the face of so much second-guessing about Fed moves inside and outside the central bank. Though soft-spoken in contrast to the bravado performances of Larry Summers, Yellen can be forceful in making her case. Her predecessor as vice chairman, Donald Kohn, has described her as a strong economist who is meticulously prepared and expresses strong views. "She's no pushover," he has said.
How good a crisis manager might she make as Fed chairwoman after Bernanke steps down in January? Assuming she's confirmed by the Senate, we'll find out soon enough.
A stalemate between Republicans in Congress and the White House over raising the debt ceiling could throw the nation into a first-ever default this fall, with unforeseen consequences that could wreak havoc on the world economy.
If that isn't enough, the Fed still has to decide when to start reversing its massive stimulus program of bond-buying, a policy shift that could have far-reaching effects on interest rates and currency values across the globe. A few years later, the Fed will have to decide when the economy is finally healthy enough to raise interest rates, another move that will surely shake world markets and economies.
Those are stiff challenges for any Fed chairman to face. Yellen, as the first woman in the post, would surely face even closer scrutiny about whether she is up to the task.
Here's a short, simple answer based on her track record:
By Owen Ullmann, USA TODAY