15 September 2013

Summers Withdraws Himself From Fed Chairmanship Consideration

"...the biggest risk we can take is to try the same old politics with the same old players and expect a different result."

Barack Obama, Democratic National Convention 2008

"Like a dog returns to its vomit, so a fool repeats his folly."

Proverbs 26:11

Larry Summers withdrew himself from the nomination as Fed Chairman today, in order to save Barack Obama from the embarrassment of having to withdraw it himself in the face of staunch opposition from a very large number of economists and Congressional members of both parties.

That the consideration for Summers as Fed Chairman went as far as it did despite such broad opposition, far beyond that of just economic progressives, demonstrates the overall poor judgment that the President has shown in economic matters from the very beginning of his presidency.

Obama has a remarkable predilection for repeatedly ignoring the wishes of his electoral base and the sound principles of genuine reform in favoring the wishes of the biggest banks on Wall Street and the monied interests.

This makes it more likely that Janet Yellen will be the next Fed Chairman, which would mark a move towards more monetary easing as Yellen is an inflation dove.   It does not speak to the regulatory activity of the Fed which has been accommodative towards the Big Banks.  But perhaps not as much as it might have been under Summers who is a long time Rubinite and noted for an aggressive bias against financial regulation. 

From the Globe and Mail:

Obama accepts ex-aide Summers's decision to not seek U.S. Fed chairmanship
Sunday, Sep. 15 2013, 4:54 PM EDT

U.S. President Barack Obama said on Sunday he has accepted the decision of his former top economic aide Lawrence Summers to withdraw from consideration as chairman of the Federal Reserve.

“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,” the President said in a statement.

“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,” he said.

Dear Mr. President,

I am writing to withdraw my name for consideration to be Chairman of the Federal Reserve.

It has been a privilege to work with you since the beginning of your Administration as you led the nation through a severe recession into a sustained economic recovery built on the policies to promote employment and strengthen the middle class.

This is a complex moment in our national life. I have reluctantly concluded than any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation’s ongoing economic recovery.

I look forward to continuing to support your efforts to strengthen our national economy by creating a broad based prosperity and to reform our financial system so that no President ever again faces what you and your economic team faced upon taking office in 2009.

Sincerely yours,

Lawrence Summers