Possible Fed choice brings Obama flak from the left

 
 
Larry Summers
Larry Summers
Olivier Douliery / Abaca Press/MCT

McClatchy Washington Bureau

President Barack Obama on Wednesday staunchly defended one of the presumed front-runners to lead the Federal Reserve Board, a candidate liberal Democrats see as emblematic of loosening regulations on Wall Street.

Obama’s remarks in defense of former Treasury Secretary Lawrence Summers came as the president met behind closed doors with Democratic lawmakers. Some of those legislators are unhappy with the emergence of Summers as a potential chairman of the Fed, which is playing an outsized role in boosting a slowly recovering economy.

The president stressed he is not close to a decision that’s expected in the fall. But he sought to counter Democratic criticism of Summers. That rancor comes as some Democrats have publicly championed the appointment of current Fed Vice Chairman Janet Yellen, who would be the first woman ever to lead the board.

Summers, an accomplished economist, is considered by critics an irascible, controversial figure. As treasury secretary for former President Bill Clinton, he pushed deregulation policies that many Democrats say helped lead to the 2008 financial downturn.

After the Clinton administration, Summers became president of Harvard University. There, he ignited controversy by suggesting in 2005 that women may not have the same innate abilities that are required to excel in science and math as men. A faculty no-confidence vote forced him from the presidency in 2006.

He also served as Obama’s director of the National Economic Council during part of the president’s first term. Obama offered a “very full-throated defense” when asked about Summers, said Rep. Gerald Connolly, D-Va. The congressman said Obama told lawmakers that Summers helped him pull back the economy “in the dark days of 2009.”

Current Fed Chairman Ben Bernanke’s second four-year term ends Jan. 31. He’s not expected to seek a third.

The choice of Summers would clearly stir controversy, even among Obama’s own party.

“If he’s the nominee I’d have a lot of questions,” Senate Majority Whip Richard Durbin, D-Ill., said after the Obama meeting. Durbin, along with 19 other Senate Democrats and one independent, sent a letter to Obama urging him to name Yellen to the position.

That letter doesn’t mention Summers, but it touts Yellen’s “impeccable resume,” saying as president of the Federal Reserve Bank of San Francisco she identified threats to the housing bubble and has demonstrated a “willingness to challenge conventional wisdom regarding deregulation.”

Senate Majority Leader Harry Reid, D-Nev., tried to quell any controversy among the party ranks, calling Summers a friend and a “very competent man.” And he added, “Whoever the president selects, this caucus will be for that person, no matter who it is.”

House Democratic Leader Nancy Pelosi, too, strived for unanimity, contending that “whoever the president chooses will be received with great respect by our caucus.”

In a weekend interview with Bloomberg Television, she said both Summers and Yellen were qualified but that “it would be great to have a woman.”

White House spokesman Jay Carney said Obama’s remarks were not meant to signal that he’s leaning toward Summers. Rather, he said they were a defense of his tenure at the White House “and his service to the country and to the president in extraordinarily trying financial and economic times.”

Carney described Summers as a hardworking senior member of the president’s economic team during the worst economic crisis since the Great Depression, standing “shoulder to shoulder with the president” as they responded to the crisis.

Speaking at a breakfast sponsored by the Christian Science Monitor, senior Obama adviser Dan Pfeiffer said Obama puts “a lot more stock in private advice than public advice” when it comes to choosing appointees.

Anita Kumar of the Washington Bureau contributed to this report.

Email: Lclark@mcclatchydc.com, dlightman@mcclatchydc.com; Twitter:@lesleyclark, @lightmandavid

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