The Washington Post

In race for Fed chair, Larry Summers reaches out to Elizabeth Warren

Economist Lawrence "Larry" Summers sought a meeting with Sen. Elizabeth Warren. (Jerome Favre/Bloomberg)

Lawrence H. Summers recently reached out to a key Democrat on the Senate banking committee as the controversy intensified over his potential nomination to lead the Federal Reserve, people familiar with the matter said.

Summers requested a meeting with Sen. Elizabeth Warren (D-Mass.) when both were in Massachusetts this summer, the people said. Warren has been a vocal critic of Summers’ s effort to deregulate the financial sector when he was Treasury secretary under President Bill Clinton. As a member of the committee that will vote first on the White House’s pick for Fed chairman, she could be a roadblock in advancing a possible Summers nomination.

Although the people familiar with the matter said the meeting never happened because of scheduling issues, the direct outreach underscores the behind-the-scenes push to install Summers in the top post at the central bank.

That effort faced a setback Friday when Sen. Jon Tester (D-Mont.), who also sits on the banking committee, announced he would not vote for Summers. Tester is expected to be joined by several other Democrats, including Sen. Sherrod Brown of Ohio and Sen. Jeff Merkley of Oregon. Losing the support of three or four Democrats would mean President Obama would need help from committee Republicans if he decided to pick Summers to lead the Fed.

“Senator Tester believes we need a consensus-builder to lead the Federal Reserve,” said Andrea Helling, Tester’s spokeswoman. “He’s concerned about Mr. Summers’s history of helping to deregulate financial markets. The senator thinks it is vital to have a chair who appreciates the important role small community lending institutions play in financial markets.”

Meanwhile, several people close to Janet L. Yellen, vice chairman of the Fed Board of Governors, said she has refused to take similar steps to plead her case. They said she was not involved in the letter this week signed by more than 400 economists urging her nomination as Fed chairman and has not reached out to Capitol Hill.

Summers did not respond to a request for comment through his spokeswoman. Warren’s spokeswoman, Lacey Rose, declined to comment.

Summers was one of Obama’s closest advisers during the president’s first term and the architect of his economic stimulus plan. But Summers has come under fire for his support for removing restrictions that prevented financial institutions from consolidating their banking and investment functions. He also sparked controversy in 2005, while he was president of Harvard University, by suggesting that women were not as capable as men in math and science.

Women’s groups are opposing Summers’s nomination and have raised concerns over the lack of women in top posts in the administration. If picked, Yellen would be the first woman to lead the Fed. Obama is expected to make a decision in the coming weeks.

Ylan Q. Mui is a financial reporter at The Washington Post covering the Federal Reserve and the economy.



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