Former Treasury Secretary and Harvard president Larry Summers called President Obama on Sunday and asked that his name be withdrawn from consideration for chairman of the Federal Reserve.
Summers claims he wants to avoid an “acrimonious” confirmation hearing, where women, the far left, and some Democratic senators on the banking committee were ready to give him a hard time. A more likely scenario is that Obama called him in the last few days and asked him to withdraw for political reasons.
“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,” Mr. Summers said in a letter to the president that followed the telephone call.
The move forces Mr. Obama to look to other potential candidates for the Fed job including Janet Yellen, the Fed’s vice chairwoman; Donald Kohn, a former vice chairman; and former Treasury Secretary Timothy Geithner. Mr. Obama has said that he interviewed the first two. Mr. Geithner has said he isn’t interested.
In a statement, Mr. Obama said he accepted Mr. Summers’s decision. He described him as “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.”
Mr. Summers, who was chairman of Mr. Obama’s National Economic Council early in his presidency, had been widely believed to be the president’s first choice for the Fed job, but opposition from liberals and women’s groups—and, importantly, from some Senate Banking Committee Democrats—has been mounting.
For them, Mr. Summers became a symbol—a caricature, his admirers say—of all the failures of financial regulation that they said led to the devastating financial crisis.
In the past few weeks, the president has faced mounting attacks from his left flank on National Security Agency surveillance and on his decision to attack Syria—and that complicated the possible nomination of Mr. Summers.
“He was very clearly the president’s choice,” a former top administration official said. “After all the problems they had with the base, a big confirmation battle looked like a bridge to far.
Summers was also a Wall Street insider and considering the fact that five years removed from the financial crisis and the left is still grousing that nobody has been put in jail, Obama felt the pressure from his far left base. With dropping approval numbers, the president could ill-afford to deliver a slap in the face to his most important supporters — especially when Summers’ main rival is a woman, Janet Yellen. You just know that Obama is aching to once again make “history” and nominate the first female Fed chief.
Ben Bernanke’s term expires on January 31, 2014.