Larry Summers, not Janet Yellen, is the better choice
Reports indicate our president has before him two (and perhaps more) outstanding candidates to lead the Federal Reserve when Ben Bernanke's term ends early next year—Larry Summers and Janet Yellen.
These two capable contenders aren't likely to have wildly different positions on the dove/hawk spectrum, though Summers is seen as the greater hawk of the two. Though even these apparent differences are likely to have been exaggerated by the financial press as Summers has been a consistent advocate for erring on the side of engaging in more, rather than less, stimulus on both the monetary and fiscal sides.
To me, the differences between the two on the policy questions before the Fed are likely to be slight. (Related: The Fed Candidates)
Yet where I think Summers' true edge lies is in his real "in the weeds" experiences with multiple financial market crises both at home and abroad over the last three decades.
It was Summers in his role as Under Secretary of the Treasury who helped Mexico craft a plan to borrow enough to lift them out of the Mexican Peso Crisis. And again, it was Summers, as Deputy Secretary of the Treasury who helped devise a confidence-instilling plan along with the IMF to address the Asian Debt Crisis in 1997. And, in 2009 as Obama's head of the National Economic Council, he played a central role in the rescue of the automakers, which provided crucial support to an economy teetering on the brink of collapse.
As Alan Greenspan famously said, "liquidity is not a financial term, it is a psychological term." Liquidity is the lifeblood of functioning markets. Confidence begets liquidity. Summers' unique participation in these tumultuous chapters of capital markets history gives him the advantage in that we can be confident that we would have the most experienced, streetwise, battle-tested financial mind at the helm.
This is crucially important because world markets are global, more inextricably linked than they have ever been. Hand in hand coordination with institutions around the world such as the IMF and other central banks will only become more common. So policy here, in the U.S, needs to take that into account.
A final thought on Larry Summers, the man. Much has been made of the comments he expressed regarding women in 2005. Any close look at the transcript shows that he posed a theory for consideration, not a conclusion to be deemed truth. Yet a comment once spun is very hard to undo.
I know Larry personally (full disclosure). I know the father that he is to both his daughters and his son, and that he expects and encourages intense academic exploration from all of them. I also know that he is an outstanding step-father to three young women whom he has encouraged and nurtured, with their mother, to be all that they can be.
As a woman in finance, I welcome the long awaited opportunity for women to be in the most powerful jobs. So while I am thoroughly impressed with Yellen's accomplishments both in academia and policymaking, we shouldn't be making this choice based on gender, we should be making the choice on the merits of the two candidates as potential central bankers. Janet Yellen would be a fine choice. I think we have an even better choice in Summers.
—Karen Finerman is CEO of Metropolitan Capital Advisors and a CNBC contributor, regularly appearing on "Fast Money".