News Release

Summers for Fed Chair? “Great Gift to the Mega-Banks”


WILLIAM GREIDER, 36greider at
Greider, national affairs correspondent for The Nation and author of Secrets of the Temple: How the Federal Reserve Runs the Country, just wrote: “Washington insiders are spreading an alarming news alert. Barack Obama, I am told, is on the brink of making a terrible mistake by appointing Lawrence Summers as the new chairman of the Federal Reserve. That sounds improbable, since Summers is a toxic retread from the old boys’ network and a nettlesome egotist who offended just about everyone during his previous tours in government. More to the point, Summers was a central player in the grave governing errors that led to the financial collapse and a ruined economy.

“Surely not, I thought, when I heard the gossip. But my source heard it from the White House. Obama’s senior economic advisers — still dominated by Clintonistas and aging acolytes of Robert Rubin — are pushing the president to choose Summers as the successor to Ben Bernanke, whose term ends in January. And they are urging Obama to make the announcement right now, before the opposition can get organized.

“To thwart this ploy, Democratic senators and rank-and-file constituents need to sound the alarm promptly and promise, loud and clear, to vote against Summers if Obama once again accepts the choice of the Clinton-Rubin crowd. The former Harvard president was himself a Wall Street player between his government positions. He was a soft-on-banks adviser to Obama during the president’s first term. Choosing Summers now would be another great gift to the mega-banks. But it would be a very tough vote for Democrats who claim the mantle of reform.” Greider’s latest book is Come Home, America: The Rise and Fall (and Redeeming Promise) of Our Country.

DEAN BAKER, via Alan Barber, barber at
Baker is co-director of the Center for Economic and Policy Research. He said today: “Picking Larry Summers for Fed chair would be exactly the wrong message to send at the moment. Summers is one of the main architects of the policies that have given us the worst downturn since the Great Depression. It would an especially bad signal to send when there is an outstanding pick already at the Fed serving as Vice-Chair, Janet Yellen. It’s great to give people second chances, but it doesn’t have to be in the country’s most important economic post.” Baker wrote the pieces “The Return of Larry Summers?” and “Democracy Versus Bankers at the Fed.”

Baker blogs at “Beat the Press” and his books include: The End of Loser Liberalism: Making Markets Progressive [available for free online] and False Profits: Recovering from the Bubble Economy.