Larry Summers pulls out from U.S. Fed consideration

Former U.S. treasury secretary Lawrence Summers, considered the leading candidate to succeed Ben Bernanke as chair of the U.S. Federal Reserve, has withdrawn from consideration, meaning the post may well go to a woman for the first time.

Position now much more likely to go to a woman for 1st time

Lawrence Summers, left, and then Treasury Secretary Tim Geithner meet near the White House in 2010. Summers has withdrawn his name as a candidate to be the next chair of the U.S. Federal Reserve, while Geithner previously said he wasn't interested in the job. (Associated Press)

The man widely considered the leading candidate to succeed Ben Bernanke as chairman of the U.S. Federal Reserve has withdrawn from consideration, the White House said Sunday.

Lawrence Summers's withdrawal followed growing resistance from critics, including some members of the U.S. Senate committee that would need to back his nomination.

His exit is poised to open the door for his chief rival, Janet Yellen, the Fed's vice-chair. If chosen by President Barack Obama and confirmed by the Senate, Yellen would become the first woman to lead the Fed.

Supporters of Federal Reserve vice-chair Janet Yellen, centre, have been openly campaigning for her to succeed outgoing Fed chair Ben Bernanke, left. (Associated Press)

In the past, Obama has mentioned only one other candidate as possibly being under consideration: Donald Kohn, a former Fed vice-chair. But Kohn, 70, has been considered a long shot.

The administration also reached out to former treasury secretary Timothy Geithner early in the process. Geithner maintained that he was not interested in being considered.

Some economists said Sunday that they think Summers's exit significantly boosts the likelihood of a Yellen nomination.

"The odds that the president will nominate Janet Yellen are now much higher," said Mark Zandi, chief economist at Moody's Analytics.

Still, Zandi added, "There is a chance that there is some dark horse candidate, possibly Tim Geithner."

David Jones, chief economist at DMJ Advisors and the author of several books on the Fed, said he saw Yellen's selection as a virtual certainty.

"There is a strong view that making a woman Fed chair is an important step," Jones said. "There is no question that her experience qualifies her for the role."

Succession battle

Summers and his allies have been engaged in an unusually public contest with supporters of Yellen, with each side lobbying the administration.

An openly waged succession battle is something that the Fed, which will turn 100 in December, has never before witnessed. The selection of a chairman has long been a matter handled privately by a president and his senior advisers.

In a statement, Obama said he had accepted Summers' decision.

As director of the National Economic Council, Summers oversaw the Obama administration's response to the economic and financial crisis early in Obama's first term.

Yet Summers faced strenuous opposition from some Democrats, including several on the Senate banking committee. Summers alluded to that opposition to his candidacy in a letter he sent Sunday to Obama to formally withdraw from consideration.

"I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the administration or ultimately, the interests of the nation's ongoing economic recovery," Summers wrote.

Summers' ascent to the top of the list to succeed Bernanke rankled both opponents of the president as well as some liberal supporters. He has alienated colleagues in the past with a brusque and at times domineering style. Unlike Bernanke, he's not been known as a consensus-builder — one reason some critics had opposed his nomination.

Summers was also seen as having been too cozy with Wall Street and was criticized for critical comments he made about women and math and science that contributed to his forced resignation as Harvard's president in 2006.

Shaunna Thomas, co-founder of the women's rights group UltraViolet, welcomed Summers' withdrawal, saying she hopes it serves as "a reminder to all that sexism has no place anywhere in society and certainly not in the highest levels of our government."

Thomas called on Obama to nominate Yellen, 67, who has been closely aligned with Bernanke and has helped devise the Fed's low-interest rates policies.


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