OK

We’ll let the HuffPo introduce the story, since that’s where I first read about it, a few hours ago…

Elizabeth Warren Signs Letter Backing Janet Yellen To Lead Federal Reserve: Report
The Huffington Post  |  By Paige Lavender
Posted: 07/27/2013 1:56 pm EDT  |  Updated: 07/27/2013 2:00 pm EDT

Sen. Elizabeth Warren (D-Mass.) has signed a letter backing Janet Yellen to lead the Federal Reserve, the Boston Globe reports.

The Globe reports on the letter:

Senate Democrats have been circulating a letter that doesn’t mention Summers, but makes a point of praising Yellen -- and urging the president to appoint her. The letter has not been made public, and a copy obtained by the Globe did not list signatures. One source estimated that nearly half of the Senate Democrats had signed on.

A Warren spokeswoman confirmed to the Globe late on Friday that the Massachusetts senator had signed it. The state’s other senator, Democrat Edward J. Markey, had not signed, according to his office.

The move puts Warren in agreement with many on Wall Street and against President Barack Obama, who is believed to want Larry Summers for the job. Opposition to Summers has recently grown, with many Democrats speaking out against his potential nomination…

Here’s a little more detail, directly from the Boston Globe, late Friday (the headline’s notable, IMHO):

Senator Elizabeth Warren signs letter backing rival of Larry Summers to lead Federal Reserve
By Matt Viser, Globe Staff
Friday, July 26th, 2013   8:00PM

WASHINGTON -- Senator Elizabeth Warren on Friday urged President Obama to appoint Janet Yellen to head the Federal Reserve, choosing to back Yellen instead of her former Harvard colleague, Larry Summers…

…Summers… is also a voluble presence, known for a tough management style…

…Warren and Summers have a history that has been at times cordial, and at times contentious.

Warren was a professor at Harvard Law School when Summers resigned as Harvard’s president in 2006 for making comments suggesting that gender differences partly explained why fewer women pursued careers in math and science.

They later clashed when Warren was heading a congressional oversight panel. In interviews, Warren said that her views differed sharply from those of Summers, as well as then-Treasury Secretary Timothy Geithner. They were too supportive of the big banks, she suggested, while she stuck up for everyday Americans.

“I think we have different world views,” she told PBS’ Charlie Rose in 2010…

Among other matters, the story reports that when Warren was “…asked if Summers could get confirmation in the Senate, she replied, ‘I don’t know.’”

Earlier this week, Naked Capitalism Publisher Yves Smith voiced some of her opinions on the matter…

Why Larry Summers Should Not Be Permitted to Run Anything More Important than a Dog Pound
Yves Smith
Naked Capitalism
Monday, July 22, 2013   5:43AM

I’ve been gobsmacked to see that not only is Larry Summers on various short lists of candidates to become the next Fed chairman, but that Summers is also supposedly closing in on the favorite, Janet Yellen.

In early 2012, Summers was lobbying hard to become the head of the World Bank and didn’t get the nod. The fact that he is now under consideration for a bigger job should set alarm bells off. While Paul Krugman weighs in on both, concluding that Yellen would be the better pick, he’s still far kinder to Summers than the Harvard economist deserves.

The big problem with Summers is not his record on deregulation (although that’s bad enough) or his foot-in-mouth remarks about women in math, or for suggesting that African countries would make for good toxic waste dumps. No, it’s his appalling record the one time he was in a leadership position, as president of Harvard. Summers was unquestionably the worst leader in Harvard’s history.

Summers, unduly impressed with his own economic credentials, overruled two successive presidents of Harvard Management Corporation (the in-house fund management operation chock full of well qualified and paid money managers that invest the Harvard endowment). Not content to let the pros have all the fun, Summers insisted on gambling with the university’s operating funds, which are the monies that come in every year (tuition and board payments, government grants, the payments out of the endowment allotted to the annual budget). His risk-taking left the University with over $2 billion in losses and unwind costs and forced wide-spread budget cuts, even down to getting rid of hot breakfasts. The Boston Globe provided an overview:

It happened at least once a year, every year. In a roomful of a dozen Harvard University financial officials, Jack Meyer, the hugely successful head of Harvard’s endowment, and Lawrence Summers, then the school’s president, would face off in a heated debate. The topic: cash and how the university was managing – or mismanaging – its basic operating funds.

Through the first half of this decade, Meyer repeatedly warned Summers and other Harvard officials that the school was being too aggressive with billions of dollars in cash, according to people present for the discussions, investing almost all of it with the endowment’s risky mix of stocks, bonds, hedge funds, and private equity. Meyer’s successor, Mohamed El-Erian, would later sound the same warnings to Summers, and to Harvard financial staff and board members.

“Mohamed was having a heart attack,’’ said one former financial executive….

In the Summers years, from 2001 to 2006, nothing was on auto-pilot. He was the unquestioned commander, a dominating personality with the talent to move a balkanized institution like Harvard, but also a man unafflicted, former colleagues say, with self-doubt in matters of finance.

Now Harvard had put some of its large operating budget at risk in speculative investments starting in the 1980s, but Summers ramped it up to a completely new level. Again from the Globe:
The very thing that the former endowment chiefs had worried about and warned of for so long then came to pass. Amid plunging global markets, Harvard would lose not only 27 percent of its $37 billion endowment in 2008, but $1.8 billion of the general operating cash – or 27 percent of some $6 billion invested. Harvard also would pay $500 million to get out of the interest-rate swaps Summers had entered into, which imploded when rates fell instead of rising. The university would have to issue $1.5 billion in bonds to shore up its cash position, on top of another $1 billion debt sale. And there were layoffs, pay freezes, and deep, university-wide budget cuts...

…So Summers couldn’t keep his ego out of the way, bullied the people around him, ignored the advice of not one but two presidents of Harvard Management, and left a smoldering pile of losses in his wake. And serious adults are prepared to allow someone with so little maturity and such misplaced self confidence to have major sway over much bigger economic decisions?

...And that’s before we get to Summers’ role in the ouster of Brooksley Born over credit default swaps, and his role as Treasury secretary in supporting the passage of Gramm–Leach–Bliley and the repeal of Glass Steagall (admittedly so shot full of holes at that point as to be close to a dead letter, but still necessary to allow Traveler and Citigroup to merge). Yet Sumers has refused to recant any of these actions

There’s a lot more to Yves’ fact-filled takedown of Summers. I strongly suggest a full read of it over at Naked Capitalism. (Here’s THE LINK, again.)

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