This is a very good thing for our economy:Larry Summers on Sunday withdrew his name from consideration as chairman of the Federal Reserve, a defeat for President Barack Obama — who could not convince members of his own party to shelve their opposition to his former top economic adviser.
Summers, who previously served as Treasury secretary in the Clinton administration, director of the National Economic Council and president of Harvard, notified President Barack Obama of his decision with a phone call Sunday morning.
“Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today,” Obama said in a statement Sunday. “I will always be grateful to Larry for his tireless work and service on behalf of his country, and I look forward to continuing to seek his guidance and counsel in the future.”
During their call, Summers told Obama he believed there was now too much political opposition to his nomination to move forward, a person familiar with the phone call said. Summers told Obama that his nomination now would create too much political uncertainty for the Fed and could thus be damaging to the economy. Obama accepted Summers’ rationale and did not attempt to convince him to continue as a candidate for the Fed job, the person said. - Politico, 9/15/13
And we have Senator Jeff Merkley (D. OR) to thank for Summers withdrawal:As Joseph Stiglitz has pointed out, few economists deserve more blame for the financial trainwreck of the last five years than Summers. In a blog for the New York Times a few days ago, Stiglitz, who won the Nobel prize for economics in 2001, commented: “As a Treasury Department official during the Clinton administration, Mr. Summers supported banking deregulation, including the repeal of the Glass-Steagall Act, which was pivotal in America’s financial crisis. His great ‘achievement’ as secretary of the Treasury, from 1999 to 2001, was passage of the law that ensured that derivatives would not be regulated — a decision that helped blow up the financial markets.”
Stiglitz added: “Some of those who were responsible for these key policy mistakes have admitted the fundamental ‘flaws’ in their analyses. Mr. Summers, to my knowledge, has not.”
Stiglitz has also pointed out that Summers’s record of egregious error goes back at least to the mid 1990s, when he encouraged East Asian nations quickly to liberalize their capital markets, a development that led straight to the Asian financial crisis.
To cap it all, Summers has seemed far too close to the seamier side of Wall Street. According to Michelle Malkin, writing in the New York Post, he received no less than $135,000 for one speech from Goldman Sachs in 2008. He also made out like a bandit from speakers’ fees from JPMorganChase and Citigroup C +1.74% not to mention such outright disaster zones as Merrill Lynch (the crippled “thundering herd” outfit that has had to be ignominiously rescued by Bank of America BAC +0.92%) and Lehman Brothers. As reported by Clea Benson of Bloomberg , Summers’s net worth as of 2009 was at least $17 million, more than 40 times the figure he reported in 1999. What made the difference was Wall Street’s unerring generosity towards those public intellectuals whose ideas sell the American public interest down the river. - Forbes, 9/15/13
Merkley's call to action has earned him praise in the press:Democratic Sen. Jeff Merkley of Oregon played a significant role in deep-sixing the potential nomination of former White House economic adviser Lawrence Summers to be the chairman of the Federal Reserve.
Summers on Sunday announced he was pulling his name from consideration for the Fed post following mounting opposition from the left flank of the Democratic Party.
Merkley, a member of the Senate banking committee, was one of the early opponents of naming Summers to the powerful post overseeing the nation's monetary system, as Obama had reportedly wanted to do. And he helped precipitate Summers' withdrawal by informing the White House that five Democrats on the banking committee were prepared to vote against him, according to a Senate Democratic source.
"Senator Merkley's well-known opposition to Larry Summers likely made a big difference," said Adam Greene of the Progressive Change Campaign Committee, one of the groups lobbying against the Summers appointment.
In July, Merkley was one of about 20 Democratic senators who joined Sen. Sherrod Brown, D-Ohio, in signing a letter to Obama urging him to appoint Fed Vice Chair Janet Yellen to the chairmanship.
The letter praised Yellen's "prescience" in warning before the 2008 financial meltdown about the "pending threats that the housing bubble and shadow banking sector posed to our entire economy." - The Oregonian, 9/16/13
Merkley spearheaded the efforts and his fellow Democrats on the Senate Banking Committee helped him build momentum:As has been widely reported, Merkley and Sen. Sherrod Brown (D-Ohio), members of the Senate Banking Committee, both bucked the president with public announcements that they would oppose Summers' appointment.
Here's how Bloomberg quoted Merkley on Sept. 12
"I start from a position of being extraordinarily skeptical that his background is appropriate for the role of the head of the Fed. If you nominate someone who is a life-committed deregulator to be in a regulatory position, and if you believe regulation is necessary to prevent fraud, abuse, manipulation and so forth, then there's a lot of questions to be asked: Why is this person appropriate?"
That's a gutsy play for a first-termer. Merkley, Brown and other critics they blame Summers' enthusiasm for deregulating financial markets for contributing to the excesses—such as predatory lending, excessive risk taking and unbridled financial speculation—that led to the 2008 recession. - Willamette Week, 9/16/13
And this guy put the final nail in Summers' coffin:The pitch from Merkley and Brown to fellow Democrats was this, according to Senate Democratic aides: If you think you’re going to vote against Summers, speak up now, because it’s less embarrassing to Obama to stop Summers before he’s nominated than after a messy confirmation fight.
Senator Elizabeth Warren, a Massachusetts Democrat and critic of Wall Street, also was involved. She informed the White House last week that she would oppose Summers, according to a person familiar with the matter.
“Larry was not my first choice for Federal Reserve chair,” Warren said in an interview today with Peter Cook on Bloomberg Television.
“I’m a big fan of Janet Yellen,” Warren said. “I think she’s terrific. She’s got the right experience, and I think she’d make a terrific Federal Reserve chair.”
Warren’s vote would have meant at least four Democrats on the banking panel were opposed to Summers. The White House would have had to rely on several Republican votes to get him through the 22-member committee.The Democratic effort spilled into the open when a senator offhandedly acknowledged in late July the existence of a letter of support for Yellen. That letter, drafted and circulated by Brown, was signed by 20 senators.
The letter touched a nerve in the White House, and with Obama himself. He defended Summers days later in a closed-door meeting with Democrats on Capitol Hill, while mentioning that Kohn also was under consideration.
As Democratic opposition grew, Summers’s supporters say the White House didn’t effectively push back. Summers was left vulnerable to what some called a “perfect storm” of events: the delay in his formal nomination, the debate raging over Syria, and the upcoming budget fights with Congress, according to a person familiar with the matter. - Bloomberg, 9/16/13
I thank Senator Merkley and his colleagues for derailing Summers' nominee. With Summers out, it's now time to build even more momentum for Janet Yellen to become the first female to chair the Federal Reserve. Please contact your Senator and tell them you want Janet Yellen to lead the Fed:Sen. Jon Tester (D-Mont.) will vote against Larry Summers if President Barack Obama nominates his former economic adviser to head the Federal Reserve, Reuters reported Friday, citing Tester spokeswoman Andrea Helling.
Three progressive, bank-reform oriented senators are already expected to oppose Summers if he is nominated: Sens. Elizabeth Warren (D-Mass.), Jeff Merkley (D-Ore.) and Sherrod Brown (D-Ohio). All three serve on the Senate Banking Committee, which would have to approve any nominee for Federal Reserve chair before sending the vote to the Senate floor, as does Tester. Since Democrats only have a two-vote majority in the committee, Summers would need to pick up Republican support in the committee in order for his nomination to advance.
Tester has close ties to the bank lobby and is generally viewed as a moderate Democrat. His opposition suggests division within the banking community over a Summers pick, a scenario that would hamper Obama's ability to win over reluctant lawmakers.
Democratic leadership in the Senate have warned Obama that a Summers nomination will result in a "very tough" confirmation fight, according to a Senate Democratic aide familiar with the effort. - Huffington Post, 9/13/13
And as a way of saying thank you, how about donating to Merkley's re-election campaign: