Jim Bruce spent three years thinking about central banking as he made the recently released documentary, "Money for Nothing: Inside the Federal Reserve."
I wrote about the film earlier this week but wasn't able to squeeze in Bruce's thoughts on the coming transition at the top of the Fed.
Of the two leading contenders Vice Chairman Janet Yellen and former Treasury Secretary Larry Summers Bruce clearly favors Yellen.
"To me it's very surprising that Summers is being discussed at all, given the fact that he doesn't really have a background at the Fed or in central banking," Bruce says.
It's a good point. Summers has done so much in his career from his start and rise at Harvard to all his government jobs to his consulting for financial institutions that you forget he's never been a central banker.
In researching the film, Bruce studied the transition of power from Paul Volcker to Alan Greenspan and then from Greenspan to Ben Bernanke. He makes another insightful observation:
"If you look at the last two transitions, they have been pretty rocky. If you look at Greenspan coming in, in 1987, two months before the crash. And then Bernanke coming in [in 2006] and things unraveling pretty quickly thereafter."
The Fed's quantitative easing "has worked because market participants believed it would work," he says.
So market psychology "comes back to the leader and there is a sense that Bernanke will do whatever it takes. As we transition [to the next chairman], I feel that's a risk for the financial landscape."
"There is so much controversy around [Summers] that to me it will be a very surprising choice, especially because so much is riding on the Fed right now and it is a delicate transition."
Bruce is a lot more confident about turning the Fed over to Yellen.
"I have huge respect for her in terms of her character and integrity, and I think she has the qualities of the leader you want at the Fed," the director says. "I do think she would have the courage to go against the grain I think she is someone who is willing to resist rising asset prices with monetary policy."
"So I feel like she has some flexibility, which is another good quality for a Fed chairman."