If Not Bernanke, Who?

Ed and Bruce raise some interesting questions regarding the Bernanke nomination.  I'm in the camp of those, like Brad DeLong, who think his nomination should be confirmed.  As Ed suggested, if it doesn't happen, it will be mostly because of the perceived political need to throw someone or someones under the bus.

But I disagree with Bruce, who said "...there is no obvious replacement for Bernanke who could get confirmed any more easily than him."

The key qualifications would be someone who:

1. Knows Wall Street but clearly isn't from there, or from there recently
2. Wasn't associated with AIG, TARP, and everything else that's already been tried
3. Is considered to be strong, smart, and independent
4. Is a good communicator and can make the case to a non-Wall Street audience about why what's being done is important to them
5. Can handle the rough and tumble of Washington in the current bitter political environment

There are likely others, but this leads me to three names:

Former Comptroller General David Walker.  My guess is that he'd jump at the opportunity.  He's a former Republican and now an Independent, which would be a plus.  David's zealousness about the deficit rubs some people the wrong way, but his devotion to reducing it would be a political asset, especially if, as Fed chairman, he would have to support policies that make stimulus a higher priority this year.  And his extensive participation on the Fiscal Wakeup Tour while he was comptroller general, which was featured in the movie IOUSA, makes him a man of the people rather than of Wall Street.

Here's the interview 60 Minutes did with Walker in 2007.

My question: Could he afford the pay cut?

San Francisco Federal Reserve Bank President Janet Yellen.  Yellen is a former chairwoman of the Council of Economic Advisors and a former Federal Reserve Board governor.  As president of the San Francisco Federal Reserve Bank she would give some comfort to Wall Street but, because she has never been part of the New York financial establishment, would also appear to be independent of it.  She would get special credit for chairing the Council of Economic Advisors not just when the deficit was declining but when the budget was first balanced in the Clinton administration.  Yellen also gets points for understanding the need for her bank to communicate to a wider audience than has typically be the case for the Federal Reserve System.

Former Federal Reserve Board Chairman Paul Volcker.  Yes, Volcker is much older than the people who usually take a position like this.  But there's no doubt that he's still very active and wants to be a player.  He's been away from Wall Street for so long that his independence could not be doubted.  Neither could his credentials.  Although he was originally appointed by Jimmy Carter, Ronald Reagan reappointed him and that makes him part of the Reagan legacy.  Voting against Volcker would be difficult for Republicans to explain without saying that Reagan had made a mistake.