The Summers Time Blues
At some point, President Barack Obama got it in his head that it would be a good idea to nominate the former Treasury secretary and director of his president’s National Economic Council, Larry Summers, to be the new chairman of the Federal Reserve.
Most people who know of Larry Summers, both on Capitol Hill and among the public, thought this was a terrible idea, especially given Summers’s history as an architect of 1990s financial deregulation. Moreover, he has a reputation for having a toxic, dictatorial personality. When it became clear that the confirmation vote count wouldn’t land in his favor, Summers, rightly, pulled his name from consideration.
It’s not a complicated story; things worked as they should.
Regardless, even with this straightforward narrative, some people think that by letting Larry Summers walk out of our economic lives, America’s monetary policy has been ruined and so has the entire country. We all should be ashamed, they gasp, clutching their pearls.
Yet, the only people who thought Summers should run the Fed were a few of his well-connected friends, including Obama. So perhaps the rest of us shouldn’t be surprised to see some in the Summers Fan Club come out to lambast the vulgar lowlifes for felling such a great man, a man primed to return the country to more better greatness.
Those who are just upset over their friend’s professional fate have taken to using a classic ruse: They are hiding their disappointment under the cloak of selflessness. They simply cannot say that they’re pissed off that their buddy — good ol’ Larry — won’t be running the Fed. It has to be framed as an American problem — something terrible has been done to America, and now the whole country will pay.
Consider the initial Twitter response from Steve Rattner, former “car czar,” Summers’s Obama administration colleague, and Wall Street fraudster:
So sad for country that Larry Summers won’t be Fed chairman
— Steven Rattner (@SteveRattner) September 15, 2013
Summers may be disappointed personally, sure. But, Rattner believes, it’s the whole country that should be bereft.
A beefier version of Rattner’s formulation comes from David Gergen, professional pundit and Harvard University professor who worked in the Nixon, Ford, Reagan and Clinton White Houses. Folks, even by Gergen’s historic standards of elite-worship, this latest column is something to behold.
Gergen watched the nomination race between Summers and Federal Reserve vice chair Janet Yellen play out over the intemperate summer months and is disgusted at all of it, including what he sees as the incivility of the process and horror of witnessing the swipes taken at Summers. In fact, that there was even a public debate over the nomination doesn’t sit right with Gergen.
Good heavens! The selection of a new Fed chair is Serious Policy Stuff, and here, in Gergen’s own time, he’s seen it carved up into a clown festival from Hell.
“One can only hope that the selection process for a Fed chair in recent weeks is no precedent for the future,” Gergen writes on CNN.com. “It has been messy, ugly and degrading to the leading candidates and could ultimately diminish the authority of the Federal Reserve itself.”
Gergen goes on to outline just how important this job of Fed chairman is:
The chairmanship of the Federal Reserve Bank is probably the second most powerful job in the United States. In combating the financial crisis and the slow recovery, it has often been more important than the presidency. Indeed, many in other countries believe it has become the most important job in the world.
So, to sum up, Gergen believes Fed chair is a job that is so important, so critical to the country, indeed to the whole world, it is a position where the stakes are so impossibly high, that … no one should voice an opinion on who should or shouldn’t have it besides the president? Okay…
And then, when the White House officially leaks that the president is thinking of naming a notorious hack named Summers to hold this most important of all chairmanships ever, it is the job of commentators and Senate Banking Committee members is to keep their mouths shut, and bow down. Why all this deference? Because, in Gergen’s words, the selection of the Fed Chair is “a solemn, crucial undertaking.”
Gergen also seems to take great personal offense that people aren’t giving Summers enough credit for the state of US economy:
Without rehashing the debate — and because I am no economist — let me just suggest a different way to look at him. First and foremost, the past two Democratic presidents, Bill Clinton and Barack Obama, selected Larry Summers as a principal architect of U.S. economic policy and in both cases were extremely grateful for his leadership.
For Clinton, Summers and Bob Rubin were mainstays in an administration when there was an explosion in jobs and the income of the bottom 20 percent actually rose faster than the top quintile.
For Obama, Summers and Tim Geithner — along with Ben Bernanke — were the most important players in staving off a depression and helping the economy back on a growth path, albeit slow.
In both administrations and in days since, Summers has consistently spoken in favor of closing the opportunity gaps in the country; that issue goes deep with him.
Indeed, Summers was a “principal architect” of Rubinomics in the 1990s and did work hand-in-hand with ex-Treasury secretary Tim Geithner to craft the country’s response to the financial crisis, which is precisely why people have problems with his being named the emperor of global economics. Gergen acknowledges Summers’s role in the ’90s repeal of the Glass-Steagall — something he instantly dismisses as having “precious little to do with causing the crash.” However, Gergen makes no mention of Summers’s, Rubin’s, and ex-Fed chair Alan Greenspan’s militant push for the Commodity Futures Modernization Act, which all but enshrined the complete deregulation of derivatives into law.
He also argues that Summers can’t be a misogynist because Facebook COO Sheryl Sandberg had said nice things about him even after she worked for him.
It’s hard to understand what Gergen is trying to say, because it feels like he watched a different process than everyone else did. Has this selection process for such an important job really been “messy, ugly and degrading to the leading candidates?”
For starters, who cares – This is public life! And welcome to it! But, for what it’s worth, no, the leading candidates weren’t degraded. One of them just happened to have a lot of baggage, and that baggage was publically examined. If that’s “degrading” try not to have so much baggage if you’re seeking the most important public job in the world ever.
Gergen, Rattner, et al, it comes down to this. Nothing much terrible happened, only: The Federal Reserve had a job opening for chairperson. Two names were floated and both had the credentials to execute the job. Many commentators pointed out that one was very controversial, while the other was not. The very controversial one wasn’t chosen to lead. There’s a (small) chance the non-controversial one still won’t be chosen.
The end. Now, exhale.