Larry Summers has withdrawn his name from consideration to be Chairman of the Federal Reserve.
"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," Summers is quoted as saying in a letter to the president, CNBC reports.
Critics said that Summers represented the destructive 'Washington-to-Wall Street revolving door.'
As Clinton’s Treasury secretary, he pushed for radical deregulation allowing investment bankers to take wild risks with the federally insured deposits of ordinary folks, a disastrous move compounded when he successfully urged Congress to pass legislation banning the effective regulation of the tens of trillions in derivatives that often proved to be toxic. [...]
...Obama, following Summers’ advice, adopted the save-the-bankers-first philosophy of his predecessor, with outrageous publicly funded bailouts of the same financial conglomerates that had put the economy into a deep tailspin. It is a policy that continues to this day, with an outlay of $85 billion a month by the Federal Reserve to purchase toxic assets from the banks’ books in the hopes that they will reinvest that largess. But as the president’s jobs critique noted, they haven’t.
Trillions have been passed on to the banks to relieve them of the burden of the toxic derivatives they created, derivatives that then-Treasury Secretary Summers testified to Congress were no threat to the “thriving market” that “has assumed a major role in our own economy and become a magnet for derivative business from around the world.” No threat there because, “given the nature of the underlying assets involved ... there would seem to be little scope for market manipulation. ... ”
Economist Dean Baker wrote that Summers has a "dismal track record" and tried "to put a break on efforts by consumer groups and their allies in Congress to rein in" bad lending practices.
"Even more important than his role in pushing financial deregulation," Baker wrote, "is the fact that Summers played a direct role in promoting the imbalances from which the economy continues to suffer."