Lawrence Summers Distancing Himself From Banks As White House Stays Mum On Choice For Next Fed Chairman (Or Woman)

on September 15 2013 3:37 PM
Lawrence Summers
U.S. economist and Harvard University professor Lawrence Summers speaks during a luncheon at the Asian Financial Forum in Hong Kong last Jan. 14. Reuters

A day after the White House denied reports it was poised to nominate former Treasury Secretary Lawrence Summers as the next Federal Reserve chairman, Citigroup Inc. (NYSE:C) said Summers has pulled out of all speaking events involving the bank for the time being.

While there’s nothing unusual about the move – Summers doesn’t want to be seen at bank-sponsored events while he’s being considered at the country’s top banker – it does suggest he’s still in the contest even if the White House hasn’t made a decision yet.

"Mr. Summers has withdrawn from participation in all Citi events while he is under consideration to be chairman of the Federal Reserve," Danielle Romero-Apsilos, a spokeswoman for the third-biggest U.S. lender, said in a statement e-mailed to Reuters on Saturday.

Summers is widely considered to be President Barack Obama’s choice to replace Fed Chairman Ben Bernanke, but Fed Vice Chair Janet Yellen is also in the running to become the first woman with her hand on the throttle of the world’s largest economy.

The next Fed chairman (or chairwoman) will have to oversee the delicate task of winding down the current policy of quantitative easing which is injecting $85 billion a month into the U.S. economy, a process that could jeopardize the country’s delicate economic recovery, already the longest since at least the early 1980s

Democratic critics of Summers say he’s too cozy with the banking sector, and that his push – along with others including former Fed Chairman Alan Greenspan – to deregulate the banking sector in the late '90s facilitated the sub-prime mortgage meltdown by allowing banks to issue toxic loans and then wrap them up into other securities and unload them on unsuspecting victims, including pension funds. Democrats on the Senate Banking Committee have said they would oppose Summers’ nomination. Meanwhile a group of Democrats in the Senate are openly backing Yellen.

Summers also was president of Harvard University from 2001 to 2006 and served as one of Obama chief economic advisors in 2009 and 2010.  

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