Women, Senate liberals and consumers all have something to rejoice about as karma has come back to bite Larry Summers in the ass. On Sunday, he withdrew from consideration for the post of Chairman of the Federal Reserve. The Federal Reserve is the nation’s central bank, responsible for supervising and regulating banks and other financial institutions. Larry Summers is the guy who:
- led the deregulation of banks under the Clinton administration
- spearheaded a drive to keep Elizabeth Warren from becoming the head of the Bureau of Consumer Protection, an agency which she developed, partly because of the opposition of his banking buddies
- as President of Harvard University, made a speech saying that women are underrepresented in the sciences because of ‘aptitude’ and ‘innate differences’ from men
The reason he withdrew boils down to one thing: he simply can’t be confirmed in the Senate. Three top Democratic Senators, all members of the Senate Banking Committee that will hold the hearings on the nomination, told the President on Friday that they will not support Summers — that they would, in fact, vote ‘no’ on sending his nomination, if made, to the full Senate for confirmation. The three are Jon Tester of Montana, Jeff Merkley of Oregon, and Sherrod Brown of Ohio. And, by the way, Elizabeth Warren is a fourth member of that committee who just might not lend her support.
This rebellion among the ranks follows on the heels of a letter sent to the President earlier this month, signed by 350 economists, that asked him to nominate Federal Reserve Vice Chair Janet Yellen to the position. The perception is that she is much more likely to continue current Fed policy and focus on stimulating the economy by working on the continuing housing crisis and the high unemployment rate. In a backhanded slap at Summers’ reputation as irascible and unable to get along with others, the letter said:
We believe that Janet Yellen is an extremely effective leader who has demonstrated her capacity to work with the other FRB [Federal Reserve Board] governors and to bring important perspectives of the American people to her leadership and decisions.
While Yellen long seemed to be a frontrunner for the post, there have been more and more indications and rumors that President Obama was leaning toward nominating Larry Summers. Women’s advocacy groups have been upset at those rumors. It was, in fact, the Institute for Women’s Policy Research that organized the economists’ letter and gathered their signatures. Even before that, in July, about one third of Democratic senators, including Elizabeth Warren and Dianne Feinstein, sent their own letter to Obama, asking that he nominate Yellen.
Of course, there’s no guarantee that, even with Summers out of the picture, the President will nominate Janet Yellen, who he reportedly doesn’t know well. Some believe he will now expand his search. In a statement released by the White House on Sunday afternoon, the President said:
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. 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.
But any future ‘guidance’ will not come as head of the Federal Reserve. Regardless of who the eventual nominee is — and Janet Yellen, with a long history of service with the Fed, is impeccably qualified — the withdrawal of Larry Summers and his enormous ambition from the fight is a huge win for the American people.