NYT: In Fed Succession, Obama Favorite Summers Faces Opposition

Image: NYT: In Fed Succession, Obama Favorite Summers Faces Opposition Janet Yellen and Lawrence Summers.

Thursday, 05 Sep 2013 07:21 AM

By Newsmax Wires

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President Barack Obama's preferred successor as the next Federal Reserve chairman, former Treasury Secretary Lawrence Summers, reportedly is facing mounting opposition.

Obama’s main concern about nominating Summers has been the potential for a Senate battle — not only from Republicans, but also from Democrats who view Summers as having been too friendly toward deregulating big banks when he was Treasury secretary in the Clinton administration, The New York Times reported.

That concern about confirmation has been affirmed as bloggers and groups on the left have mobilized, either to oppose Summers or to urge Obama to pick Janet Yellen, the economist he named to be Fed vice chairwoman in 2010, to be the first female Fed chairman, the Times reported.

Editor’s Note: Obama Donor Banned This Message (Shocking)

The president has interviewed Summers and Yellen for the job, as well as Donald L. Kohn, a former Fed vice chairman, aides told the Times. But administration insiders say they believe Obama remains inclined to nominate the man who, as his chief economic adviser through 2009 and 2010, helped him through the worst global financial crisis since the Depression.

Summers’s edge, the insiders say, reflects that relationship and not any arguments against. Yellen, whom Obama does not know well. And they do not rule out another candidate, though no other names are known to be in the mix.

Criticism of Summers is familiar in Washington. His widely acknowledged intellect is offset by imperiousness that makes him hard to work with, some of his opponents told the Times.

"Larry is many things — he is brash, he is crass, he does not tolerate fools well, and he has to be the smartest person in the room,” one longtime official told the Times.

But Pimco CEO Mohamed El-Erian cautioned that investors don't know what Summers' policies would be. "We don't have enough information to make an assessment, just some second- and third-hand accounts," El-Erian has said.

Joann Weiner, who teaches economics at George Washington University, thinks Yellen and Summers should serve at the Fed together.

"I'd like to see Obama continue to make history by nominating Yellen, who would be the first woman to lead the Fed, as the chairman and to see him nominate Summers to take over Yellen's post and become so-called chairman-in-waiting," she wrote in The Washington Post.

Moreover, Reuters reported that a Summers-led Fed would appear less likely to extend or expand the use of the extraordinary measures that the central bank has undertaken during the tenure of current chairman Ben Bernanke, whose term expires in January.

The distinction between Summers and Yellen is perhaps best illustrated by remarks they delivered at separate events in April.

Yellen, a strong supporter of Bernanke's policies, in a speech to business editors in Washington, exhorted the Fed to keep its focus on efforts to foster a lower unemployment rate, even if it comes at a cost of stronger-than-desired inflation.

By contrast, Summers, in a separate, closed event in California later that month, raised doubts that the unemployment rate could drop all that much lower without kindling unwanted levels of inflation.

He also was skeptical about how effective the Fed's massive bond buying program, known as quantitative easing, has been in promoting economic growth.

Editor’s Note: Obama Donor Banned This Message (Shocking)

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