Larry Summers drops out

NEWS COVERAGE WITH ANNOTATIONS (Note the picture was specially chosen to show Summers at his best) - Larry Summers, the former Harvard President and current somewhat Washington insider withdrew his name from consideration as Fed Chair today.  In his note to the President he said he had "reluctantly concluded" that the confirmation process would be "acrimonious and not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation's ongoing economic recovery." (Read he counted the votes or the President's staff did.)  He also is quoted as saying  “This is a complex moment in our national life. 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.” (Read again he did not have the votes and the President has lots of other nasty fights to deal with.  Read also that the President's approval rating (on the RCP average) on handling of the economy is just a bit over 40%)  The President responded with "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 president said in a statement.  (Note the President reads polls too)

"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," the president added.  The President did not express an opinion about Summers' tireless quest for the Fed job.

Summers was a key figure in the early stages of the Clinton Administration and also served a key role with the current one.   He has a well deserved reputation as arrogant. (see an earlier post)  Yellin has more direct bank experience and although she is likely to be more accommodative than ideal - I expressed an opinion earlier that she is a better choice.

The speculation is that the liberals got him in favor of Janet Yellin.  From my perspective that is a bit too simple.   Some polling on the Summers nomination got negative reviews from bankers and others on Wall Street.   A USA Today survey found that 56% of the economists polled preferred Yellin. There may be a third candidate Donald Kohn (who was a Bernanke deputy)- but I would put my money on Yellin (which is indeed what you do when a new Fed Chair is named)