WASHINGTON -- President Barack Obama is leaning towards former White House Economic Adviser Larry Summers as his choice to replace Ben Bernanke as chairman of the Federal Reserve, according to people who have been briefed on the administration's thinking. Liberal critics of Summers' economic record, along with those who continue to question his ability to work with women, are waging a last-minute campaign to persuade the president to change his mind and instead choose the other frontrunner for the job, Fed Vice Chair Janet Yellen.
Chatter increased Tuesday among Summers' opponents when Fed Governor Sarah Bloom Raskin's name was floated as a possible deputy to Treasury Secretary Jack Lew. Raskin, who has been harshly critical of the Fed, is broadly popular with progressives. Liberal Fed watchers suspected the move was aimed at people pressing Obama to name a woman to the Fed, and they worried selecting Raskin for Treasury would give the president cover to name Summers Fed chairman.
"We are concerned by rumors that Larry Summers, a man known for his offensive and callous opinions on women, is currently being considered to head the Federal Reserve. Women will not soon forget if President Obama picks Mr. Summers for such an important post, a man who believes women are somehow inherently less capable than men," Shaunna Thomas, co-founder of feminist group UltraViolet, said in a statement. "It is high time to shatter the glass ceiling at the Fed and appoint a woman to a post that impacts so many women, and Janet Yellen would be a much celebrated pick."
Summers worked in the Clinton administration as a protege of Treasury Secretary Bob Rubin, and helped lead the effort to deregulate Wall Street. Rubin, a long time Goldman Sachs trader and executive, moved to Citigroup after his time in the Clinton administration. Rubin has been a leading advocate of the bond-holding community, which favors a strong dollar, low inflation and a loose labor market, otherwise known as high joblessness. Rubin has been a critic of Bernanke's efforts to stimulate the economy, arguing that it could weaken the dollar and drive inflation, both of which would drive down bond prices. (Even this week, Rubin was making phone calls urging that Detroit's bondholders be fully repaid, one source familiar with his lobbying said.)
Summers' opponents worry that he will follow the advice of his mentor and dial back the Fed's efforts to drive down unemployment in order to appease the bond market. Yellen, meanwhile, argues that protecting bondholders is not the Fed's only job.
Others who have been briefed by the administration cautioned that the decision is not yet final. As speculation that Summers' ascension was all but assured picked up on Tuesday, administration officials told congressional Democrats that a choice hadn't been made.
At least one senator expressed his dismay Tuesday at the possible selection of Summers. "Larry Summers for Fed Chair? Disconcerting," Sen. Jeff Merkley (D-Ore.) tweeted, "many questions to answer."