Don't be so sure Janet Yellen will be the next Fed chair

Just about everyone thinks that Janet Yellen will be nominated to be the next chairman of the Federal Reserve.

She was widely assumed to be the favorite before it emerged that the president and his economic team were actually backing Larry Summers. Now that Summers has stepped down, Yellen is the favorite once more.

Sen. Chuck Schumer endorsed her.

"Well, until a few days ago, I said both Janet Yellen and Larry Summers would be good Fed chairs and I could support either one, now that Summers has pulled out, I think the president should choose Yellen. She's an excellent choice," the New York Democrat told Politico.

The Washington Post's Zachary Goldfarb reports the White House is leaking out word that Yellen is their choice.

Federal Reserve Vice Chairman Janet Yellen is the leading candidate to be President Obama's nominee to lead the Fed as chairman, a White House official said Wednesday. Barring any unexpected development, that likely means that Yellen will get the nomination, perhaps as soon as next week.

People close to the White House said this week that Yellen was the front-runner after the unexpected withdrawal by former White House economic adviser Lawrence Summers, who was facing sharp resistance on Capitol Hill.

There are, however, reasons to doubt that Yellen will get the nod.

The first is that Obama's inner circle waged a campaign to keep her out of the position. They painted her as someone who wasn't a team player. They described her as someone who couldn't think on her feet. On policy, they said she wasn't concerned enough about financial bubbles.

This all happened behind the scenes but not all that quietly. You can see evidence of these points in Neil Irwin's column titled "Why the White House is uneasy with picking Janet Yellen as Fed chair."

Yellen knows that Obama's people tried to keep her out of the office. She knows what they were saying about her. And Obama's team knows that Yellen knows.

It seems odd that an administration that highly prizes loyalty would appoint someone who has very good reason not to feel very loyal to Obama.

(Read more: Blinder makes case for Yellen)

What's more, Yellen's supporters were responsible for the defeat of the president's first choice, Summers. Defeating the president in the political arena is not usually a way to win his favor. Rewarding the liberal Democrat senators for defying the president is an invitation to further defiance.

Finally, the messy process by which Yellen rose to be the top contender may create serious problems for her ability to be effective as Fed chair.

Everyone will know that she was, at best, the second choice. You do not want the second-best person heading our most important economic institution.

This isn't to say there's no way Yellen will be nominated. But I'm skeptical about the idea that she's got a lock on the job.

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