Larry Summers, former Treasury secretary and president of Harvard, has withdrawn his name from consideration for the chairmanship of the Federal Reserve, a position that opens up in January 2014. Summers called President Obama to tell him the news this morning and followed up the talk with a letter explaining his reasoning. He wrote: “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 economy.”
He’s probably right. As of Friday, there were at least three or four Democrats, including Elizabeth Warren, on the Senate Banking Committee, which has to confirm the Fed appointment, who promised to vote against Summers, meaning he needed at least that many Republican votes to get through. Their objection to Summers mainly consisted in concerns about his role in financial regulation (or lack thereof) in the 1990s, his 2005 comments about women’s apititude in math and science, his ties to Wall Street, and his reputation for arrogance and brusqueness.
Whether those were good reasons to oppose him or not (the last seems like it was, and was the real reason Harvard fired him), one hopes that the debate over who should replace Ben Bernanke will focus less on such concerns and more on what the candidates envision for the role of the Federal Reserve and the future of U.S. monetary policy.
That’s more like the debate former Council of Economic Advisers chairman Glenn Hubbard recommended in a recent NRO piece, but it still may not be the one we get. There has already been plenty of talk from the left about the merits of nominating Fed vice chairman Janet Yellen — focusing mostly on her sex, rather than her aptitude and vision for monetary policy, which happen to be almost definitely more impressive than Summers’s. And don’t look for President Obama to lead the debate in the right direction either: Summers, who looked like the front-runner, was mainly the president’s favorite, apparently, because the president knew and trusted him as an insider who worked in the Obama administration during the financial crisis, which is also, needless to say, not a good way to pick a Fed chairman.
UPDATE: It appears the White House’s trial-balloon quasi-nomination was even more of a disaster than we knew: The Times’ Annie Lowrey reports that Senator Jeff Merkley of Oregon tried calling White House chief of staff Denis McDonough on Friday to tell him that there were five Democrats likely to vote against a Summers nomination (he left a message).