Larry Summers says “no thanks” to the Fed

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Summers has surprisingly decided to withdraw his candidacy for the post as head of the Federal Reserve soon to be vacated by Ben Bernanke

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Larry Summers / Getty

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In a surprising turn of events, Larry Summers one of the two front-runners to become the next chairman of the US Federal Reserve has written to President Barack Obama requesting that he no longer be considered for the post. Reportedly, in the letter he sent to President Obama, Summers explained his fears regarding the confirmation process, which he expected to become “acrimonious”.

Summers decision to withdraw means that the current vice-chairman of the Federal Reserve Ms. Janet Yellen appears to be the only other serious contender.

According to information received from the White House president Obama has accepted Larry Summers’ decision and the reasons for it.

Larry Summers explained in his letter to the president that he had reluctantly reached the conclusion that the atmosphere of acrimony expected to be generated during the selection process would be detrimental to the interests of the Federal Reserve and ultimately could affect the interests of the nation’s ongoing economic recovery”

Summers’ statements could be interpreted as a reference to the opposition that reports of his candidacy apparently upsetting some of the more influential members of Obama’s Democratic Party, particularly members of the Senate Banking Committee, with whom he has had a number of runs in with, during his years at the White House.

Later the White House released a statement in which the president recalled that Larry Summers was a critical member of the team faced with handling the worst economic crisis since the Great Depression. “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 summed up in his statement, also just going on to mention that he looked forward to continuing to seek Summers’ guidance and counsel in the future.

Before joining the White House staff for the first time in 1999, Larry Summers gained considerable experience in the public sector, most notably as chief economist for the World Bank in the years 1991 to 1993.

Lawrence Summers was also a key member of President Bill Clinton’s administration serving as the Deputy Secretary of the Treasury from 1995 to 1999 under Robert Rubin, replacing him in 1999 and holding the post until 2001.

Summers returned to the White House in January 2009 where he remained until November 2010 as Director of the White House United States National Economic Council for President Barack Obama.

Since leaving the NEC, Summers has worked as a consultant for hedge funds D. E. Shaw & Co and Citigroup, as well as acting as aspecial
adviser to the up-and-coming venture capital firm Andreessen Horowitz, while also writing a regular column for the Financial Times, published in the United Kingdom.

Bernanke’s term as Fed chief is due to expire at the end of January next year. If Ms Yellen is chosen to succeed him, she will be the first woman to hold the post. Other possible contenders being mentioned, although largely considered as outsiders, are Christina Romer, another key figure in the White House’s economic recovery plan, Roger Ferguson and Donald Kohn, both of whom were former vice-chairmen of the Federal Reserve Bank and Alan Krueger, currently chairman of Obama’s Council of Economic Advisors.

Larry Summers was born in New Haven, Connecticut and raised in Penn Valley, a suburb of Philadelphia.

In 1971, aged just sixteen Summers began his degree studies at the Massachusetts Institute of Technology (MIT), originally intending to study physics. However he was to begin a lifelong romance with economics and very soon switched to complete his degree on that subject, going on to study for his Masters at Harvard University. In 1983, Summers, when aged just 28, and the distinction of becoming one of the youngest tenured professors in Harvard’s history.

Summers also served as the 27th President of Harvard University during the years 2001 to 2006.

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