Summers Out

NYT
Summers Pulls Name From Consideration for Fed ChiefBy ANNIE LOWREY and MICHAEL D. SHEARPublished: September 15, 2013
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WASHINGTON — Lawrence H. Summers, one of President Obama’s closest economic confidantes and a former Treasury secretary, has withdrawn his name from consideration for the position of chairman of the Federal Reserve amid rising opposition from Mr. Obama’s own Democratic allies on Capitol Hill.

Lawrence Summers in 2010. His reputation for being brusque and decisions on financial regulatory matters had made him a controversial choice.

In a statement released by the White House on Sunday afternoon, Mr. Obama said he had accepted the decision by his friend even as he praised him for helping to rescue the country from economic disaster early in the president’s term.

“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,” Mr. Obama said in the statement.

He added: “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.”

Mr. Summers appeared to have been the White House’s favored candidate to succeed Ben S. Bernanke as chairman of the Fed, though Mr. Obama had repeatedly said he had not yet made a decision between Mr. Summers, Janet L. Yellen, who is a vice chairwoman of the Fed, or someone else.

But Mr. Summers’s reputation for being brusque, his comments about women’s natural aptitude in mathematics and science, and his decisions on financial regulatory matters in the Clinton and Obama administrations had made him a controversial choice.

Three Senate Democrats on the Banking Committee had come out against Mr. Summers’s nomination, meaning that the White House might have had to barter for as many as three Republican votes for him even to pass out of committee.

In a letter to the president, Mr. Summers said that he had “recently concluded that 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.”

For Mr. Obama, the concession by Mr. Summers ends a frustrating period in which the most private of White House deliberations became a public spectacle and fodder for an ugly disagreement among the president’s supporters and allies.

Reports earlier this summer that Mr. Obama was nearing a decision to name Mr. Summers to lead the Federal Reserve provoked outrage among some liberals in Congress, and forced a rare defense of him by Mr. Obama behind closed doors on Capitol Hill.

In a closed meeting with the House Democratic Caucus in July, Mr. Obama offered a strong defense of Mr. Summers’s contributions to the economic health of the country and said he was being unfairly maligned by critics.

The White House tried to quiet critics of Mr. Summers by indicating that a decision on who should lead the Fed was months away. In an interview with The New York Times on July 24, Mr. Obama said that he had not yet decided.

“I have not made a final decision,” he said. “I’ve narrowed it down to some extraordinarily qualified candidates.”

Throughout much of the summer, the candidates appeared to be Mr. Summers and Ms. Yellen, and each drew support from different parts of the Democratic Party.

Advocates for Ms. Yellen argued that she was better equipped to take the helm of the nation’s central bank at a time when the economy was still recovering slowly. Progressives argued that she would be more likely to continue the Fed’s policies of stimulating the economy.

But much of the advocacy behind Ms. Yellen was framed as a critique of Mr. Summers. Many liberals said Mr. Summers was too closely connected to Wall Street and to the culture of deregulation that they blamed for the economic crisis.

In a letter signed by 20 Senate Democrats in July, the lawmakers urged Mr. Obama to nominate Ms. Yellen saying that “at a time of persistently high national unemployment, the next chairman must focus on returning our economy to full employment.”