Larry Summers has withdrawn his name for consideration as the next Federal Reserve chair.
Summers’ nomination had bewildered many Democrats. And Summers apparently finally realized that if he went through with the nomination process, it was going to be acrimonious, and risk a possible Democratic filibuster of the President’s own nominee.
Former Nobel economist Joe Stiglitz, among others, has been pushing Janet Yellen instead of Summers. Stiglitz is – how shall I put this? – not Larry Summers’ greatest fan. Here’s Stiglitz in a recent op ed in the NYT:
Regulatory failures have been at the center of previous crises as well. At Treasury in the 1990s, Mr. Summers encouraged countries to quickly liberalize their capital markets, to allow capital to flow in and out without restrictions — indeed insisted that they do so — against the advice of the White House Council of Economic Advisers (which I led from 1995 to 1997), and this more than anything else led to the Asian financial crisis. Few policies or actions have greater culpability for that Asian crisis and the global financial crisis of 2008 than the deregulatory policies that Mr. Summers advocated.
Supporters of Mr. Summers argue that he is exceptionally qualified to manage crises — and that, while we hope that there won’t be a crisis in the next four years, prudence requires someone who excels at those critical moments. To be fair, Mr. Summers has been involved in several crises. What matters, however, is not just “being there” during a crisis, but showing good judgment in its management. Even more important is a commitment to taking actions to make another crisis less likely — in sharp contrast to measures that almost ensure the inevitability of another one.
Mr. Summers’s conduct and judgment in the crises was as flawed as his lack of commitment in that regard.