Lawrence Summers Will Not Chair the Federal Reserve

Over the screaming objections of members of his own party, President Obama seemed determined to appoint Wall Street groupie Lawrence Summers to head the most important bank in the country. On Sunday, Summers “reluctantly” withdrew his name from consideration for the post.

In a letter to the president quoted by The Washington Post, Summers 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.”

Summarizing the progressive upset with Summers, Truthdig Editor Robert Scheer wrote in a July column, “The idea that Barack Obama would still consider appointing Lawrence Summers to head the Federal Reserve rather than order an investigation into this former White House official’s Wall Street payments, reported Friday by The Wall Street Journal, mocks the president’s claimed concern for the disappearing middle class. Summers is in large measure responsible for that dismal outcome, and twice now, after top level economic postings in both the Clinton and Obama administrations, he has returned to gorge himself at the Wall Street trough.”

Scheer was referring to the millions of dollars Summers has been paid by Wall Street firms between stints in public service. As a public servant, Summers championed legislation and policies that made it much easier for the financial services industry to make billions of dollars while tanking the global economy.

But President Obama really likes and trusts Summers, and his White House has argued that the former Treasury secretary is misunderstood. Obama told a room of Democrats in July not to believe everything they read on The Huffington Post, apparently in reference to criticism of Summers.

Beyond his cozy relationship with hedge funds and banks, Summers has been scorched for his attitudes toward women. In 2005, when he was the president of Harvard University, Summers said the reason there weren’t more women in senior science, math and engineering positions was not discrimination, but a biological predisposition for women to fail in those disciplines.

If Obama nominated Summers to head the Fed, he would essentially be promoting his male friend ahead of Janet Yellen, who is already vice chair and presumably next in line to lead the institution. Summers’ misogynist baggage did not help the argument that he is somehow more qualified than the woman up for the job.

If President Obama didn’t get the message, Summers did. By withdrawing his name from consideration, he spares us all the “acrimony” of pointing out the many problems with his nomination. Besides, he’s bound to make a fortune right where he is, earning speaking and consulting fees from the financial institutions that have benefited so well from his time in government.

— Posted by Peter Z. Scheer