Hot topic of next Fed chair not on program at Jackson Hole

This year's gathering of the world's central bankers had a theme as lofty as the Grant Teton Mountains which loomed over their meeting place — "Fostering a Dynamic Global Economy."

But while many hours were devoted to sitting in a windowless conference room dissecting the symposium's academic papers on how to bolster lackluster global growth, one hot topic was not on the program — who will President Donald Trump nominate to be the next leader of the Federal Reserve once current Chair Janet Yellen's four-year term is up next February.

Trump has said he is considering picking Yellen for a second term despite the harsh things he said about her during last year's presidential campaign. But he has also said Gary Cohn, the head of Trump's National Economic Council and the man overseeing the selection process, is in the running as well.

On the record, current Fed officials were very diplomatic about the possible change. Robert Kaplan, president of the Fed's Dallas regional bank, did not want to talk about specific candidates, only saying, "We are a very resilient organization so I am very confident about our ability to be effective" whoever is chosen.

Esther George, president of the Kansas City Fed, the host for the conference, also didn't want to discuss potential candidates for the top job or the other vacancies on the seven-member Fed board. "These are important jobs," she said in an interview on CNBC. "So you want people who understand that full mission and are prepared to roll up their sleeves and come to work."

Given the discussions outside the conference room, the bottom line is that no one here had any idea what Trump might do or when he might do it. Trump said in an interview last month that he expects to wait until the end of the year to make a decision, a timeline which many thought was risky given that whomever Trump picks will have to clear the Senate confirmation process and Yellen's term as chairman will be up on Feb. 3.


The mystery surrounding Trump's choice for Fed leader pervaded not only the hallway discussions but also the analysis of the speeches at the conference.

As is customary, Yellen, as the current Fed chair, was the lead-off speaker on Friday morning. She devoted her comments to a vigorous defense of the financial regulatory overhaul that a Democratic Congress and Barak Obama, a Democratic president, put in place in the wake of the 2008 financial crisis. She said the changes had made the financial system more resilient and she rejected arguments that Republicans critics have made that the changes have lowered bank lending and hurt economic growth.

Her remarks prompted a number of financial market analysts to opine that Yellen's strong defense of the 2010 Dodd-Frank Act, which Trump during the campaign called a "disaster," had lessened the chances that Trump would select her for a second term.

But Yellen's supporters noted that she signaled in her speech that the Fed was prepared to be flexible in making minor changes that would lessen regulatory burdens, particularly on small community banks.


Cohn, the other front-runner for the Fed job, was not present for the conference, but a number of other prominent economists who have been mentioned as potential candidates were here.

John Taylor, a Stanford University economist famous for the "Taylor Rule" that lays out a rules-based approach to setting monetary policy, participated in all the conference discussions. Also present was Glenn Hubbard, dean of the Columbia University Business School, who chaired the Council of Economic Advisers in the George W. Bush administration and has often been mentioned when the Fed's top job has come open. In his July interview with the Wall Street Journal, Trump said he had other candidates in addition to Yellen and Cohn but he declined to name them.

Randall S. Kroszner, a professor at the University of Chicago who played a key role as a member of the Fed's seven-member board during the 2008 financial crisis, is also viewed as someone Trump might decide to choose. He chaired the conference's final session on Saturday.

While Kroszner stuck to the traditional role of moderating the discussions and keeping the symposium running on time, it couldn't hurt that he had a prominent role at a conference attended by the Fed's top officials as well as central bank leaders from countries spanning the globe.


One group at Jackson Hole did not have a spot on the official program, but they were the most vocal in terms of expressing their opinions on who should be the next Fed chair. Fed Up, a group representing community activists, labor unions and liberal policy groups, held a rally Friday on the grounds of the mountain lodge where the conference took place and presented petitions signed by 20,400 people urging Trump to pick Yellen for a second term.

Some protesters dressed as Janet Yellen super heroes complete with green capes and Yellen's signature white hair to show their support.

The protesters said they believed Yellen would be far superior to Cohn, who spent 26 years on Wall Street as a top executive at Goldman Sachs.

"Yellen Yes, Wall Street No," one of their signs read.