Barack Obama says he will 'always be grateful' to his former economic aide for his 'tireless work and service'
Barack Obama's hopes of a smooth transition of power at the US Federal Reserve were dealt a significant blow on Sunday night when Larry Summers unexpectedly pulled out of the running to replace Ben Bernanke when he stands down in January.
Summers, a former Treasury secretary under President Clinton, had been frontrunner to take charge of US monetary policy during a crucial phase in the economic recovery but is understood to have been deterred by the prospect of bumpy Senate confirmation hearings.
Despite an impeccable track record as an economist and policymaker, Summers remains widely associated with the period of laissez-faire economic policy-making that led up to the banking crash and his decision to step aside on the eve of the fifth anniversary of the crisis shows how raw the politics remain in Washington.
The White House will issue a report on Monday detailing the steps it has taken to reform Wall Street and repair the economy, but has been criticised by Democrats for failing to tackle the entrenched power of the banks.
Obama paid tribute to the role of Larry Summers in dealing with the aftermath of the financial crisis as director of the White House economic council from January 2009 until November 2010.
"Earlier today, I spoke with Larry Summers and accepted his decision to withdraw his name from consideration for Chairman of the Federal Reserve," Obama said in a statement. "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."
The decision leaves the way open again for Janet Yellen, current vice chairwoman at the Fed, who has been lobbying hard for the job and would be the first woman at the helm of US economic policy.
Summers withdrew from the race in a phone call to Obama on Sunday morning, according to initial reports in the Wall Street Journal.
"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," Summers wrote in a separate letter.
Obama said in a White House statement issued on Sunday: "I will always be grateful to Larry for his tireless work and service on behalf of his country, and I look forward to continuing to seek his guidance and counsel in the future."
Summers's career was dogged by controversies, notably over his support for deregulation in the 1990s and for comments he made while president of Harvard about women's aptitude in maths and science.
Rumours that Obama was leaning toward nominating Summers over Yellen elicited an unprecedented amount of controversy for a potential nominee to run the US central bank. Four Democratic senators on the Senate Banking Committee were expected to vote against him if nominated by the president.
Summers is the second high-profile potential nominee to withdraw under pressure in Obama's second term. Susan Rice, now Obama's national security adviser, stepped back from consideration to be secretary of state over controversy surrounding her role in explaining the 2012 attack in Benghazi, Libya, which claimed the lives of four US government employees, including the ambassador.
Article Source : http://www.guardian.co.uk
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