Somewhat controversial Fed chair candidate Larry Summers has withdrawn his name from contention in the bid to succeed current Federal reserve chairman, Ben Bernanke. Stating in his withdrawal letter to President Barack Obama, Summers said, “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 built on policies to promote employment and strengthen the middle class.”
Summers, considered to be a brilliant economist, the once-candidate never truly received the full support of the Democratic party, facing stiff competition in the form of Janet Yellen, who is now widely considered to be the front-runner to succeed Bernanke.
"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,'' President Obama said in a statement on Sunday.
Criticized for being instrumental in the Clinton-era deregulation that brought Wall Street to its knees, forcing the AIG bailout of around $85 billion, Summers was met with staunch resistance from Democrats, as well as Republicans. Not only pointing to the deregulation issue, but also to comments made regarding women’s inferior intellectual capacities in relation to science and math while president of Harvard (this would lead to his dismissal).
"It became obvious he did not have support from some in his own party and had too much baggage to get approved for a number of reasons," said Richard Daskin, chief investment officer at RSD Advisors in New York, told The Chicago Tribune.
Democratic Sens. Sherrod Brown (D-OH) and Jon Tester (D-MT), both members of the Senate Banking Committee, openly opposed Summers’ candidacy. Sen. Jeff Merkely (D-OR) also stated that he would oppose Summers and it was assumed that architect of the Consumer Financial Protection Bureau (CFPB), Sen. Elizabeth Warren (D-MA) would also have hopped on the anti-Summers bandwagon.
"Larry Summers' past decisions to deregulate Wall Street and do the bidding of corporate America has made the lives of millions of Americans more acrimonious. He would have been an awful Fed Chair," said Adam Green, co-founder of Progressive Change Campaign Committee, a political advocacy group, to the Chicago Tribune.
While Summers appeared to have few friends in Washington, outside of the Oval Office, he was heavily criticized for accepting around $5 million from hedge fund D.E. Shaw in 2008 under the guise of accepting speaking engagements. Other Wall Street companies paid Summers over $2.7 million for speaking engagements. Though considered, at the time, to be a widely-respected economist, Summers appears to have accepted bailout money afforded to Wall Street firms such as Citigroup, who paid an annual bonus to the former Fed candidate around $2.25 million for “consulting work.” Summers was also implicated in the Academy Award-winning documentary, "Inside Job," as a key figure that helped cause the financial crisis, as well as in a relatively lengthy feature in The Chronicle of Higher Education.
As the field continues to narrow and with Yellen receiving conservative support, it’s interesting to note that back in 2000, legendary economist Milton Friedman stated that a computer could easily perform the functions of a Fed chair.