(c) 2013, The Washington Post.
(c) 2013, The Washington Post.
WASHINGTON — Former Treasury secretary Lawrence Summers has withdrawn his name as a candidate for Federal Reserve chairman, in a startling development that raises new questions about who will lead the Fed when Chairman Ben Bernanke steps down in four months.
The other main candidates for the job have been Fed vice chairman Janet Yellen and former Fed vice chairman Don Kohn, though it is still possible that President Barack Obama seeks another choice. Time is short for nominating someone for the critical post, with a confirmation process expected to last several months.
Obama had been strongly leaning toward picking Summers, who helped him navigate the depths of the financial crisis and recession at the beginning of his term, and had assurances from Democratic Senate leadership leaders that they would work to get him confirmed, according to people familiar with the matter.
But amid an intensifying uproar of liberal Democrats and left-wing groups opposed to his nomination, Summers decided to withdraw his name on Sunday, telephoning the president to tell him his decision.
"It has been a privilege to work with you since the beginning of your Administration as you led the nation through a severe recession into a sustained economic recovery," Summers, a Harvard professor, wrote in a letter to the president. "This is a complex moment in our national life. I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration, or ultimately, the interests of the nation's ongoing economic recovery."
Obama accepted Summers's decision, lauding him and saying that he planned to continue to consult his former adviser.
"Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today," Obama said. "I will always be grateful to Larry for his tireless work and service on behalf of his country."
People close to the Fed process said Summers faced not only a rebellion among liberal Democrats but also other unexpected interruptions, including the debate over whether to strike Syria, that stretched out the process and gave time for more opposition to build.
Summers's nomination would have also collided with a tumultuous series of fall debates on the budget.
"It was just a perfect storm of bad timing," said one person close to the White House. "It would have been absolute war and the president would have had to spend all of his political capital. Larry decided not to drag him through it."
The contest for Fed chairman had taken on the shape of a political race, with allies of both Summers and Yellen advancing their cases on the record and behind the scenes.
A wide array of current and former Obama officials backed Summers, arguing that his crisis experience and economic prowess made him an exceptional candidate. Yellen's supporters, meanwhile, noted that she has deep Fed experience and has been an architect of the central bank's efforts to reduce unemployment.
When word of Summers's candidacy first circulated, liberals erupted, furious at what they said was his record of supporting deregulation in the Clinton administration. Obama took to defending him when questioned on Capitol Hill, and his supporters noted that he was an architect of the president's regulatory response to the crisis.
In order to buy time and cool tensions, the White House announced that no decision would be made until the fall. But that gave only space for Summers' s opponents to strengthen the opposition to his candidacy, with four of the 12 Democrats on the Senate Banking Committee, which would confirm Summers, signaling opposition.
That would have meant that the president would have probably had to court Republican support for a Summers nomination, while also trying to strike deals to keep the government open and operating.
Summers's withdrawal is a disappointing setback for a renowned economist who had climbed to the top of nearly every ladder of his profession_ as Treasury secretary, Harvard president and senior White House economic adviser. The Fed chairman would have represented the peak of that ascent.
It's also a setback for Obama, who is fiercely loyal to his aides but has now on several occasions seen his preferred candidates for jobs lose out as a result of political opposition. It's especially painful given that it's Obama's own party that cost Summers the job.