What a pleasant surprise when I walked in the door from my daughter’s softball game and saw that Larry Summers had withdrawn his name from consideration to succeed Ben Bernanke. It’s not a new topic here nor in my commentary in the media that I thought Summers was the wrong person at the wrong time for the job. The man doesn’t play well in the sandbox with others and stuck his feet in his mouth regarding women when he was president of Harvard.
There is no argument that Larry Summers is brilliant, but there are many brilliant people on earth who should not be running the most powerful central bank on earth. Let’s not forget that Summers was a strong proponent of repealing Glass-Steagall, the depression era legislation separating banks and brokerages. That didn’t work out so well for Citi, Bank of America, Wachovia, etc. in 2008. And to go a step further when he worked in the Clinton administration, Summers was also one of the architects who allowed those derivatives of mass destruction, credit default swaps, etc. to be created and allowed to exist unregulated. You remember those, right? The alphabet soup of fancy products that no one understood.
Finally, as I have mentioned before, the Fed has an almost $5 trillion balance sheet, something I forecasted years ago and was laughed at. Even if Larry Summers did not have all the baggage he does, it’s not the right time for a Fed chair who basically was opposed to Bernanke’s quantitative easing (money printing) and would unwind it much quicker than a more dovish person.
Once again, Janet Yellen becomes the front runner and with the bipartisan support already in place, her nomination should sail through. I keep scratching my head why President Obama would push so hard for Summers when congressmen in his own party are so opposed that they felt it necessary to sign a petition supporting Yellen. And that doesn’t take into account how fierce republican opposition already was for Summers. To a dummy like me, Summers nomination was DOA…
