08/09/2013 04:43 pm ET Updated Aug 09, 2013

Obama: Larry Summers Isn't Front-Runner For Fed Chair, Would Make Excellent Fed Chair

WASHINGTON -- President Barack Obama on Friday pushed back against rumors that his former economic adviser Larry Summers has "the inside track" among potential nominees to succeed Ben Bernanke as chairman of the Federal Reserve.

When asked by Major Garrett, a reporter for National Journal and CBS News' Chief White House Correspondent, whether Summers indeed had "the inside track," Obama said that both Summers and another top choice, Janet Yellen, were excellent candidates who would make superb leaders at the Fed. Yellen, who is currently vice chairman of the Fed, has been endorsed by several Senate Democrats and a majority of House Democratic women.

"I have a range of outstanding candidates -- you've mentioned two of them, Mr. Summers and Mr. Yellen," Obama said, before quickly correcting himself on Yellen's gender. "Uh, Ms. Yellen."

While Obama's slip of the tongue is not likely to be viewed as evidence of any hostility toward women held by the president, it was an awkward faux pas to emerge given the persistent refrain from Summers critics who say he does not work well with accomplished women colleagues.

Obama said he defended Summers in a meeting of House Democrats last week because some members of the press had been attacking Summers "for no reason." Since Summers had done good work during the early years of his administration, Obama said, he felt compelled to defend his old adviser. But that defense was not an indication that he currently prefers Summers to Yellen, he said.

"Major, I'd defend you if people were saying something that wasn't true about you," Obama said. He did not detail which criticisms of Summers he found untrue.

Summers served as director of the president's National Economic Council during the first two years of the Obama administration. He has come under fire for his history of bank deregulation, as well as a sexist speech he delivered while serving as president of Harvard University and what some former administration officials have described as a hostile attitude toward women he worked with under Obama.

When Summers served in the Clinton administration, he supported the repeal of a measure separating traditional bank lending and the riskier securities business. He also helped push through a platform exempting derivatives from securities laws.

Under Obama, he prevented Council of Economic Advisors Chair Christina Romer from presenting an economic analysis to the president that showed the economy needed significantly more than $800 billion in economic stimulus, and he opposed appointing now-Sen. Elizabeth Warren (D-Mass.) to head the new Consumer Financial Protection Bureau.

Derivatives tied to mortgages and the insurance giant AIG's credit-default swaps were at the center of the 2008 financial crash. The Fed's authority as a bank regulator was significantly expanded by 2010's Dodd-Frank financial reform bill.

Yellen is a broadly respected economist who accurately predicted the accumulation of a housing bubble and warned about problems in the mortgage market ahead of the 2008 crash. She misgauged the ultimate severity of the bubble, however, predicting that its bursting could be absorbed by the broader economy, when it in fact sparked a massive financial crisis.

Obama did not explicitly mention The Huffington Post in Wednesday's press conference, but he specifically criticized HuffPost's coverage for making Summers a "progressive whipping boy" in last week's meeting with House Democrats.

The New York Times editorial board, the National Organization for Women and the feminist group Ultra Violet have all endorsed Yellen over Summers to head the Fed. Thirty-eight women members of the House Democratic caucus sent a letter to Obama endorsing Yellen just hours after last week's caucus meeting.


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