There are certainly much worse choices than Larry Summers to replace Ben Bernanke as chairman of the Federal Reserve's board of governors. Alan Greenspan comes to mind. Or Jamie Dimon. But given the universe of people to select from, it's sad Summers is even on the short list of possibilities, not to mention the top of that list.
But thanks to leaks 10 days ago that some say were orchestrated in support of the former secretary of the Treasury and former director of the National Economic Council, it became apparent that Summers was the favorite candidate of President Obama for the position. That sparked an anti-Summers storm not just from grassroots liberals who find his deregulatory fervor, policy and tactical misjudgments and sexism deeply troubling, but also from many Democratic senators who would be called upon to confirm him if he actually got the nomination.
They got practical about it. Nineteen Senate Democrats and one independent signed a letter circulated by Sen. Sherrod Brown that urges the president to choose Federal Reserve vice chair Janet Yellen to replace Bernanke. Among the signers of the letter are Sen. Elizabeth Warren of Massachusetts, Jeff Merkley of Oregon and Dick Durbin of Illinois, the Senate's second-ranking Democrat.
Although President Obama won't pick a replacement until this fall, at a meeting with some House Democrats on Wednesday he gave a "full-throated" defense of Summers and said he had been unfairly criticized.
That defense is no guarantee Obama will appoint Summers. But it's no surprise to hear from Ben White and Patrick Reis that Summers is still the No. 1 choice at the White House in a piece in which they lay out the case against Summers along with retorts from some of his defenders.
While giving a too little attention to the sexism that Ezra Klein perfectly laid out Wednesday, the two reporters acerbically and accurately pointed out that Summers's foes' "real complaint is that he is a centrist, Clinton-era retread ill-suited to steer an anemic economy back to health."
Before you join me for more below the fold:
Please sign our petition requesting that President Obama not appoint Larry Summers as Federal Reserve chair, and consider instead appointing a better-qualified person, such as Deputy Chair Janet Yellen.
Last week, Robert Kuttner filled in some detail:
Under Fed Chairman Ben Bernanke and vice-chair Yellen, with the strong backing of other progressive Fed governors such as Daniel Tarullo and Sarah Bloom Raskin, the Fed has championed the aggressive use of monetary policy to promote economic recovery, as well as tougher banking regulation. Traditionally the most conservative and Wall Street-friendly of government agencies dealing with the economy, the Fed has become one of the most progressive, at least compared to the Obama Treasury.
This independence has unnerved Wall Street moguls like Robert Rubin, as well as Obama's senior economic advisers, all of whom are Rubin protégés. The idea of installing Summers to lead the Fed would put the bank back in friendly hands, at a time when the government is belatedly increasing bank capital standards, cracking down on abuses with derivatives, and the idea of breaking up the biggest banks has growing bipartisan support. Rubin has also expressed alarm that the Fed's liberal monetary policy under Bernanke could be courting inflation.
Since the decision of who will actually get the head-of-the-Fed nomination is at least a couple of months away, opponents of appointing Summers have ample time to organize against him. Signing the petition
will help that effort, but pressure must be exerted on senators as well. If enough of them declare their support for Yellen in the next two months, the White House may decide Summers, no matter how favored he is, won't get enough support.