It's Friday, and I feel like talking about Tim Geithner.

In lieu of that, though, I'm happy to discuss the Fed for a moment. The New York Times is reporting that San Francisco Fed President Janet Yellen (that's her to the right) has been chosen as the new Fed vice-chair. Paul Krugman, for one, is happy:

Good news: Janet Yellen will be the Fed’s new #2. She’s open-minded, a good counterweight to the inflation hawks who think that any day now we’ll be partying like it’s 1979. She’s also a distinguished scholar, with much of her work in New Keynesian macro.

She’ll provide exactly the kind of intellectual flexibility the Fed needs.

And when is Paul Krugman happy? (This could be a trap).

Seriously, though, Yellen is known to be in favor of the kinds of things that liberals would like to see the Fed getting more involved in. She's likely to be a vote in favor of focusing efforts on reducing unemployment rather than an alarmist votein favor of monetary policy that would encourage a focus on reigning in (currently non-existent) inflation.

Yahoo for Yellen! And Yahoo for Obama!

This is exciting not just because it makes The Krug happy, though: it's exciting because it shows that someone's paying attention to the gaps in the Fed staffing. And whoa, are there gaps: Yellen's move to D.C. will mean there's someone in place when current Vice-Chairman Donald Kohn retires this summer, but there are two empty seats right now on the Federal Open Markets Committee (AKA the D.C. Fed) in addition to Kohn's (and now there's going to be an open seat in San Fran).

With his earlier appointment to the board (Daniel Tarullo), this would give Obama the majority of appointments on the 7-member board: Yellen, Tarullo, person X, and person Y. (It's five if you count his re-nomination of Bernanke). That's an important amount of influence on an important and influential agency. Love it or hate it, you've got to realize that the Fed is one of the biggest players in town -- and now more than ever, particularly if it gets handed additional regulation duties through new financial reforms.

Reuters says there are candidates for the two open slots that are currently being vetted. All kinds of names have floated, including current chair of the Council of Economic Advisors Christina Romer. (I vote her). Having seen the timeline and results of the Obama vetting process... I wish I was more confident that this would lead to any kind of quick fulfillment. Alas.