Summers withdraws from Fed chair consideration

Former US treasury secretary had been expected to succeed Bernanke next year

Mon, Sep 16, 2013, 07:55

Former US treasury secretary Larry Summers has withdrawn from consideration to succeed Federal Reserve chairman Ben Bernanke after fierce opposition from within the Democratic Party hurt his chances of being confirmed in Congress.

Mr Summers, a former top aide to US president Barack Obama and widely regarded as a brilliant economist and a shrewd and decisive policy maker, was considered to be the front-runner for the position to replace Mr Bernanke, whose second term expires in January.

But Mr Summers was dogged by controversies including his support for deregulation in the 1990s when he ran the US treasury department in the Clinton administration - blamed by some for the financial crisis of 2007-2009 - as well as for comments he made about women’s aptitude while president of Harvard.

“It became obvious he did not have support from some in his own party and had too much baggage to get approved for a number of reasons,” said Richard Daskin, chief investment officer at RSD Advisors in New York.

Mr Summers’ withdrawal appeared to open the door for the nomination of Fed vice chairwoman Janet Yellen, who was seen as his chief rival for the position.

Ms Yellen, who has a long career in the Fed system and also chaired the White House Council of Economic Advisers under former president Bill Clinton, would be the first woman to lead the US central bank.

Still, the president has said he is also considering others, and has mentioned former vice chairman Donald Kohn, who retired in 2010 after 40 years at the Fed.

Roger Ferguson, who was vice chairman from 1999-2006 and is currently chief executive of the academic retirement fund TIAA-CREF is also considered a possibility.

Former treasury secretary Timothy Geithner, while popular at the White House made clear yesterday he has not wavered from his oft-expressed disinterest in the job.