Summers pulls out of race to be Fed chief

The Washington Post

Lawrence Summers, a former Treasury secretary and senior White House economic adviser, has withdrawn as a candidate for Federal Reserve chairman in a startling development that raises urgent questions about who will lead the central bank when Chairman Ben Bernanke steps down in four months.

Summers withdrew after an intense uproar among liberal Democrats, women’s groups and other advocacy organizations against his potential nomination — a highly unusual assault on the candidate whom President Barack Obama appeared to favor for the job.

Obama has said he is considering two other candidates for the post: Fed Vice Chairman Janet Yellen and former Fed Vice Chairman Don Kohn. But he was leaning toward picking Summers, people close to the White House say, and the economist’s decision to take his name out of the ring might lead Obama to pursue a wider range of candidates.

Summers helped Obama navigate the depths of the financial crisis and recession, providing a degree of support that Obama has told aides he deeply valued. No official, with the possible exception of former Treasury Secretary Timothy Geithner, did more to influence the president’s response to the traumatic events he faced at the beginning of his term.

On Sunday, Summers telephoned the president to tell him he was withdrawing his name from consideration.

“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,” Summers wrote in a letter to the president.

He added: “This is a complex moment in our national life. 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.”

Obama accepted Summers’ decision, lauding him and saying that he planned to continue to consult his former adviser.

“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,” Obama said. “I will always be grateful to Larry for his tireless work and service on behalf of his country.”

The decision marks a disappointing turn of events for the renowned economist, who has operated at the highest levels of academia and government.

But he has been dogged by controversies. Summers has come under fire for his support for deregulating parts of the banking sector while he was Treasury secretary under President Bill Clinton. While president of Harvard University in 2005, he also sparked controversy for comments on women’s aptitude in math and science.

People close to the White House said Summers faced not only a rebellion among liberal Democrats but also other challenges, including a debate over whether to launch a military strike against Syria that stretched out the Fed process and gave more time for opposition to build.

“It was just a perfect storm of bad timing,” said one person close to the White House. “It would have been absolute war, and the president would have had to spend all of his political capital. Larry decided not to drag him through it.”

The contest for Fed chairman had taken on the form of a political campaign this summer as allies of Summers and Yellen advanced their cases in the news media — and in behind-the-scenes whispering campaigns.

A wide array of current and former Obama officials backed Summers, arguing that his crisis experience and economic prowess made him an exceptional candidate. Yellen’s supporters, meanwhile, noted that she has deep Fed experience and has been an architect of the central bank’s efforts to reduce unemployment.