Why is there going to be a new chairperson?
Bernanke's second term as Fed chair ends next January, and he has said he won't stick around for a third. So the White House is figuring out who it will nominate to replace Bernanke. Once that happens, the nominee must be approved by the full Senate, which probably wouldn't happen until Bernanke steps down.
Who are the leading candidates?
The New York Times outlined the three leading candidates on Friday. They are:
Timothy Geithner. The former Secretary of the Treasury was considered a possibility for the position until he apparently told the president that he didn't want it.
Donald Kohn. Kohn is a former vice chairman of the Fed under Bernanke and a long-time (four decades!) staffer of the organization. Kohn only emerged as a candidate this week, when the president mentioned him during a meeting with Capitol Hill Democrats.
His name was such a surprise that the Washington Post quickly put together a "meet Donald Kohn"-style post. The highlights? "He was a reluctant supporter of unconventional policy;" "He is apolitical;" "He would be the oldest newly appointed Fed chair." (These are good things to throw out while you wait for your hamburgers to cook this weekend. Credit the Washington Post when you do so.)
Larry Summers. Summers served as Treasury Secretary in the Clinton administration, then becoming the president of Harvard University. In the Obama administration, he served as director of the National Economic Council, an advisory body to the president on economics. Prior to his work at Treasury, Summers was the chief economist at the World Bank.
Summers is the only one of the three top candidates without experience at the Fed. He is also the most controversial candidate, which we'll describe further below.
Janet Yellen. Yellen, a native New Yorker, is the current vice chair of the Fed. She, too, is a Clinton administration vet, having led the Council of Economic Advisors in the late '90s. In 2004, she became president of the Federal Reserve Bank of San Francisco, and then joined the board of the Fed in 2010.
This list is not final. There's still a lot of time in which Obama can introduce new options. He does need to build political support for his choice, but a relatively popular wild card — such as a newly inspired Tim Geithner — could sneak in.
Who supports each candidate?
So far, the debate has basically been between Summers and Yellen. (Obviously, since Kohn's name wasn't mentioned before this week.) But that debate has been spectacularly contentious.
Part of that stems from Summers' history. When he was president of Harvard, Summers made now-infamous comments about the difference between men and women in certain academic fields. Those comments were somewhat oversimplified to imply that Summers thought women were worse at math and science. As it became apparent that his primary opponent for the Fed job would be Yellen, gender quickly became an issue.