When the White House floated the name of Larry Summers as a “leading candidate” to head the Federal Reserve upon Ben Bernanke’s retirement, the trial balloon was quickly strafed with as many bullets as a shooting gallery target at an NRA convention.
A letter supporting Janet Yellen, the current vicechair of the Fed, gathered “nearly half” of the Senate Democratic caucus. Women’s groups issued protests, led by the National Organization of Women and UltraViolet. Progressive bloggers and analysts, as well as many independent Wall Street analysts voiced their criticism. By the end of the week, the president let it be known that no appointment was imminent, and that he would name his choice over “the next several months.”
Katrina vanden Heuvel
Editor and publisher of the Nation magazine, vanden Heuvel writes a weekly column for The Post.
No doubt, some of the heat against Summers came from his well-founded reputation for being something of a cad. He is infamous for bullying those who disagree with him. As Harvard president, his comment that women are somehow innately unable to compete in the higher levels of math and sciences triggered widespread faculty dismay and contributed to his abrupt resignation from the presidency. And as former FDIC chair Sheila Bair pointed out, “unlike Larry Summers,” the superbly qualified Yellen was “not part of the deregulatory cabal that got us into the 2008 financial crisis.”
That Obama would consider nominating Summers over Yellen stupefied many women leaders. But the backlash against the White House feelers on the Fed reflected much more than the sensible desire to break open what Bair called the “exclusively male marbled offices of big bank regulators.”
The Summers’s feelers ran into the incipient but growing reaction against the destructive hold that the Wall Street wing of the Democratic party has on this White House and its economic policy.
Summers is a poster boy for this Wall Street wing — literally. He joined then-Treasury Secretary Robert Rubin and Federal Reserve Chair Alan Greenspan on the infamous 1999 Time magazine cover celebrating “The Committee to Save the World.” That, of course, was before the Wall Street wilding they helped to unleash ended in financial collapse and the worst global downturn since the Great Depression.
Summers, along with his mentor Rubin, pushed deregulation of the banks under Clinton. He helped drive through the repeal of Glass-Steagall, allowing for the consolidation of mega-banks like Citibank (Rubin joined Citigroup after leaving the Treasury). He scorned then-Commodities Futures Trading Commission Chair Brooksley Born when she sensibly sought to regulative derivatives, which Warren Buffett calls “weapons of financial mass destruction.” Summers’s supporters — led by Rubin and his acolytes around the White House — argue that he has learned from the “experience.” Across the country, Americans still struggle to recover from that “experience.” For someone in the inner circle like Summers, there is neither accountability nor shame.
Like Rubin, Summers also personifies the revolving-door culture between Wall Street and government. After getting pushed out at Harvard, Summers pocketed millions with the large hedge fund D.E. Shaw. While in that role, he dismissed as “Luddites” those who warned about the dangers of the growing housing bubble.