It's official: Pretty much everybody thinks Larry Summers would make a terrible Federal Reserve chairman.
Everybody, that is, except for the one guy whose vote matters*: President Obama, who has apparently decided that Summers is now the front-runner for the Fed job, according to the Washington Post's Ezra Klein. MSNBC's Christopher Hayes reported that the White House has "all but decided" to pick Summers. And CNBC's John Harwood also reported on Monday that, when asked if Summers was the top candidate for the post, Obama said he "should be."
No! No, President Obama, he should not be. Let us all hope that this is simply some kind of very frightening trial balloon and not reality. Because Larry Summers, the former Treasury Secretary, Harvard president, Obama economic adviser, toxic-waste-dump-finder, woman-disser and Winklevoss dream-crusher, would be wrong for the job in so many ways. I could write you several hundred words about that, as I did last year when Summers' name was on the list of potential presidents of the World Bank.
But I don't have to do that, because the Internet did it for me yesterday, almost immediately after Klein's story was published.
First, there were reminders of a post by Quartz's Matthew Phillips last week called "Three Reasons Why Larry Summers Should Not Be The Next Federal Reserve Chairman." Those three reasons are among the same reasons I said he shouldn't be World Bank president, including:
- 1. His push to deregulate the financial system during the 1990s
- 2. His squelching of efforts by Brooksley Born and others to regulate derivatives in the 1990s
- 3. His short-sightedness about the possibility of a financial crisis, which stands in stark contrast to the prescience of Fed Vice Chairman Janet Yellen, who was until recently the front-runner for the Fed chair job -- and who would still make a far better Fed chair than Summers, as FTAlphaville's Cardiff Garcia explains.
What's worse, Summers is completely unrepentant of his role in the crisis and seems to have learned no lessons from it, as Felix Salmon noted last year, particularly when it comes to financial regulation. This is not exactly the track record you seek when looking for somebody to take the wheel of your economy. Firedoglake's David Dayen warns in Salon that "Larry Summers will destroy the economy (again)." Or, as Cullen Roche of the blog Pragmatic Capitalism put it:
How often does one guy get two chances to wreck the world's largest economy?
— Cullen Roche (@cullenroche) July 23, 2013
And then Yves Smith of the Naked Capitalism blog reminded us that "Summers was unquestionably the worst leader in Harvard’s history," including but limited to his push for the university's endowment to blow $2 billion on risky investments, including interest-rate swaps.
As Marketplace host Kai Ryssdal put it:
Observation: Larry Summers couldn't run Harvard. And now he's gonna run the global economy? Makes no sense.
— Kai Ryssdal (@kairyssdal) July 23, 2013
There is also the small matter of Summers' personality, which is at the very least less collegial than Ben Bernanke's and at the very worst like that of Colonel Kurtz with a kidney stone. As Reuters' MuniLand blogger Cate Long put it:
Cocky, arrogant Larry Summers smacking down reporters in pressers.... that will grow confidence in the government...
— Cate Long (@cate_long) July 23, 2013
Slate's Amanda Marcotte says she has heard that the sexist whisper campaign against Yellen has been encouraged by supporters of Summers, which is just perfect for a guy who doesn't think ladies are good at math.
Another Reuters writer, columnist James Saft, summed up what most people were thinking:
Larry Summers being named Fed Chair would once again confirm that life is not a tragedy but a sit com.
— James Saft (@jamessaft) July 23, 2013
And New York magazine's Kevin Roose teased us all with false hope:
My sources are telling me that Carlos Danger is the front-runner for Fed chair.
— Kevin Roose (@kevinroose) July 23, 2013
* And also this guy.