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Shortly after the election, the rumor of Obama seeking a replacement for Bernanke in the guise of Summers first surfaced. At the time, the scuttlebutt was that Summers wasn't getting the Treasury job because Obama had plans to name him to the Fed when Bernanke's term expires in January 2010. Obama thus supposedly named Summers to head the national economic council to keep him abreast of economic policies to insure that his transition to the Fed was a smooth one. The president's transition team swatted the rumor down at the time, but it briefly caught fire in the blogosphere and the media, notably at U.S. News & World Report's Washington Whisper blog and even in The Wall Street Journal. Indeed, the president himself felt it necessary to address it again in a press conference on Tuesday when he said Bernanke has done a "fine job." However, the president stopped short of saying he would definitely reappoint Bernanke. If Obama doesn't reappoint him, it would certainly be surprisingly, not only because of the still-dicey economic climate, but also because one-term Fed chairmen over the last 50 years are rare. (An exception is G. William Miller, who held the post for a year before President Carter appointed him Treasury secretary in 1979. It is also worth noting that if this rumor comes true, then Summers would join Miller as the only two to have ever been named both Treasury secretary and Fed chairman.) So what would it take to can Bernanke for Summers? A BusinessWeek article simply suggests a failure to reach recovery this year could be reason enough to show Bernanke the door. Despite the babbling in the media, InTrade suggests that the odds are strong Obama will not replace Bernanke, but the odds are beginning to trend downward as the chatter heats up. If Obama ultimately chooses to oust Bernanke, it won't be all bad news for him. As a consolation prize, he'd likely receive a big cash advance for his memoirs. And given all the chatter about what really happened between Bernanke, Paulson and Bank of America Corp.'s (NYSE:BAC) Ken Lewis, it likely will be a hit with the Wall Street crowd that watches Kudlow. - Matthew Wurtzel
See story about Obama press conference from CNNmoney
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