Expectations have grown that former Treasury Secretary Larry Summers will win President Obama's nomination for Federal Reserve chairman. But some warn that likelihood isn't good news.
There has been a roaring debate about whether the president will select Summers or Fed Vice Chair Janet Yellen to replace Fed Chairman Ben Bernanke, who is expected to leave his post in January.
For a while, Yellen was thought likely to win the nomination. Then, earlier this week, a source from the Obama camp told CNBC that Summers is likely to be named chairman in a few weeks.
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"There is a lot to be said that the next Fed chair is going to be picking up a surgery in the middle of surgery, think of it that way — that's very difficult to do," CEO of Bull and Bear Partners Jack Bouroudjian told CNBC, referring to the difference between Summers and Bernanke's policies.
Summers is predicted to be a greater hawk than Bernanke is and prone to far less democratic decision making. Many analysts expect Summers to rapidly unwind the current stimulus programs if given the reigns at the Fed.
"That could be the black swan that people aren't expecting," Bouroudjian said.
Many argue that January is already terrible timing for the leadership change. The markets are currently facing headwinds associated with uncertainty about the Fed's future monetary policy and the potential effects of tapering. Then, there is the political showdown over the federal budget and debt ceiling, which seem imminent. And, there are also the potential effects of a military intervention in Syria.
Critics of Summers argue that his appointment would only aggravate matters.
"The problem is the Fed is in a transition phase," Boris Schlossberg, managing director at BK Asset Management told CNBC. "[At a time] when you need the strongest amount of leadership, you have none. ... It could create big, big problems for the Obama administration."
Schlossberg noted that appointing Summers would be "Obama's worst policy error ever" because "the last thing you need in a turbulent market ... is to put such a controversial figure on top."
Bloomberg columnist Ezra Klein, disagrees, arguing that Summers makes a good fit.
Summers isn't just the favorite for the Fed position, Klein wrote. He's the overwhelming favorite and will get the job unless something unforeseen arises.
He underscores that Summers was part of the Clinton administration and Obama's economic picks mirror those of his Democratic predecessor.
Any newcomers Obama appointed are gone, Klein explained, and the top slots on the economic team are all held by members of the Clinton clique.
Klein stated, "Running a White House's economic policy is a tough and unusual job, and not that many people have experience doing that."
Members of the former Clinton team, however, have the rare combination of being both qualified and good.
Summers' fate for the nomination is near sealed because Obama has shown he doesn't take risks with his economic team. Knowing that the economy can fall apart at any moment, the President will view it as "too dangerous to take a flier on some untested newcomer," Klein concluded.
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