Cashing out: Hounded by criticism, Larry Summers calls off Fed chairman bid

Larry Summers withdraws bid for Fed chairman 1:16

Former U.S. Treasury Secretary Larry Summers has withdrawn his bid for consideration to succeed Ben Bernanke as Federal Reserve chairman — a move that allows the administration to sidestep a potentially contentious confirmation process.

"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," Summers said in a letter to President Obama.

Obama has accepted Summers' decision. He said in a statement that the former Harvard University president 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."

Summers, who was chairman of Obama's National Economic Council early in his first term and is widely seen as one of the White House's leading financial gurus, had been touted as the president's first choice for the Fed job. He had previously served as Treasury secretary under President Clinton.

However, many liberals, as well as three key Senate Banking Committee Democrats, have been vocally opposed to Summers' nomination, citing alleged failures of financial regulation that they charge sent the economy spiraling into crisis.

And some women’s groups have for years been critical of Summers, who in 2005 reportedly said that the shortage of women involved in science and engineering fields was partly due to the “intrinsic aptitude” of the gender.

Bernanke's second term concludes Jan. 31. He has suggested he does not want a third stint in office.

Summers’ move leaves the door open to other candidates, such as current Federal Reserve vice chairman Janet Yellen, 66 — a top contender and Bernanke ally who analysts say would guarantee a smooth institutional transition. 

Other contenders in the mix include Christina Romer, one of the chief engineers of the White House’s economic recovery plan; Roger Ferguson, a former Fed vice chairman; and Alan Krueger, the chairman of Obama’s Council of Economic Advisors.

Obama, for his part, has suggested that former Fed vice chairman Donald Kohn would be considered for the post.

Some observers have speculated that former Treasury Secretary Timothy Geithner is in consideration. However, he has gone on-record saying he doesn’t want the job.

Investors apparently approved of Summers' decision. Dow futures were up 1 percent Sunday evening, pointing to a sharply higher stock market opening Monday morning. Investors had been concerned that the Fed, with Summers at the helm, would be likely to ease off on the economy's gas pedal by allowing interest rates more leeway to rise.

Meanwhile, other observers have floated theories that the White House wouldn’t have had enough political capital to fight for Summers after aggressively pushing for a congressional resolution on military action in Syria this month.

Obama is expected to announce his pick as early as this month.


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Larry Summers meets with Chinese Communist Party's Central Organization Department Minister Li Yuanchao at the Great Hall of the People in 2010 in Beijing, China. Credit: Feng Li / Getty Images file