In a stinging rebuke to the forces of financial deregulation in general, and the Robert Rubin clique in particular, Larry Summers withdrew his name from consideration for Chairman of the Federal Reserve after it became clear he could not be confirmed. The withdrawal marks a major failure for a man whose path to power seemed unstoppable despite having a career defined by helping cause the financial crisis of 2008.
Mr. Summers, a former Treasury secretary who has been one of the president’s top advisers, withdrew in a phone call with Mr. Obama Sunday morning. In a subsequent letter to Mr. Obama, he wrote: “I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation’s ongoing economic recovery.”
The letter, short and self-serving, concludes a bitter behind the scenes battle in Washington for one of the most powerful financial offices in the world.
The opposition to Summers was both ideological as well as personal and culminated with both Democrats and Republicans in the Senate refusing to allow his nomination by President Obama to go through.
Mr. Summers, who was director of Mr. Obama’s National Economic Council early in his presidency, was widely believed to be the president’s first choice. But opposition from liberals and women’s groups—and, importantly, from some Senate Banking Committee Democrats—had been mounting…
Mr. Obama angrily defended Mr. Summers at a closed-door meeting with lawmakers, but he did little to thaw views among many liberal and centrist lawmakers that Mr. Summers was too combative and too close to Wall Street.
Both before and after working in the Obama Administration Larry Summers had been taking money from Wall Street firms – notably Citigroup a bank he helped while in office. Summers was a walking conflict of interest who simply could not be trusted to hold Wall Street accountable.
Summers’ withdrawal also, ironically, opens the door for the first female chair. Summers was booted from being the President of Harvard after claiming there might be evidence woman are less able to do math and science than men (though there are alternative theories), but his withdrawal may help clear the path for Janet Yellen to become the first woman to chair the Federal Reserve.
Regardless of who becomes the next Fed chair there is little doubt among many that whomever is selected could come close to being as conflicted, obnoxious, and dangerous for the economy as Larry Summers.
Photo by Riana under Creative Commons license.