OLD Media Moves

Summers faces opposition for Fed chair

September 6, 2013

Posted by Liz Hester

Lawrence Summers, considered by many to be the front-runner to be the new Federal Reserve chairman, isn’t likely to have an easy nomination process if he’s President Obama’s pick.

But Obama knows that his confirmation may be difficult, according to the New York Times story.

As President Obama turned to second-term job openings soon after his re-election, the topic one day in the Oval Office was probably the most important economic decision he would make: Who should succeed the Federal Reserve chairman, Ben S. Bernanke, after 2013?

The president’s preference: His former economic adviser, Lawrence H. Summers.

Mr. Obama, well aware of Mr. Summers’s love-him-or-hate-him reputation and the trouble he could face winning Senate confirmation, reasoned that it was hardly too soon to think about courting senators, even if a final decision on a nominee was nearly a year off. Shifting from his confidants — Treasury Secretary Timothy F. Geithner and the man who soon would succeed him, the White House chief of staff, Jacob J. Lew — the president gave Rob Nabors, then his liaison to Congress, the Summers project.

“He needs to do some work on the Hill,” Mr. Obama said, according to people with knowledge of the meeting. “You need to work with him, Rob.”

Months later, decision time is here, and Mr. Obama still has not settled on Mr. Summers or Janet L. Yellen, the economist he named to be Fed vice chairwoman in 2010.

Yet as that Oval Office exchange shows, the president has long had Mr. Summers in mind — and still has him in mind — to become the world’s most powerful central banker. The relationship is based on an intellectual partnership that dates to the 2008 campaign and was “forged in the crucible of the financial crisis,” as the longtime Obama strategist David Axelrod put it.

The Wall Street Journal named several prominent Democratic senators who are likely to vote against Summers nomination.

At least three Democrats on the Senate Banking Committee are expected to oppose Lawrence Summers if he is nominated to become Federal Reserve chairman, setting up a razor-thin vote to determine who will lead the central bank at a critical moment for its easy-money policies.

Democrats hold a two-vote majority on the 22-member panel, so the loss of three Democrats would make it impossible for Mr. Summers to advance to the full Senate for a confirmation vote without the backing of some the 10 Republicans. No Republican has publicly expressed support so far for any potential White House nominee for Fed chief, giving President Barack Obama little margin for error.

The committee Democrats expected to oppose Mr. Summers are Jeff Merkley of Oregon, Sherrod Brown of Ohio, and Elizabeth Warren of Massachusetts, according to congressional aides. The banking committee is the panel that will hold confirmation hearings on the nominee and vote on whether to send him or her to face a final vote in the 100-member Senate.

“I think he’d have a tough time” getting confirmed in the Senate, said Sen. Mark Begich (D., Alaska), who isn’t on the panel but has suggested he would vote “no” on the Senate floor if Mr. Summers makes it that far. He said the president has the right to nominate the candidate of his choice but “I think this one is problematic.”

Mr. Summers couldn’t be reached for comment.

Mr. Obama has said the candidates he is considering include Mr. Summers, Fed Vice Chairwoman Janet Yellen and former Fed Vice Chairman Donald Kohn. “The president has not made a decision on this nomination, but we are confident that members of the United States Senate will carefully consider his nominee based on that individual’s merits and qualifications,” White House spokeswoman Amy Brundage said.

Mr. Obama will announce his choice for the job sometime after Congress returns from recess on Sept. 9, according to a senior administration official.

No matter whom he ultimately selects, the next chair of the Federal Reserve will still have to navigate the implementation of new laws as well as new financial products. Monetary policy will be top of mind as the economy improves (or not, depending on said policy). Whoever is running the agency will have a lot to navigate. Here’s hoping he or she still has some political capital after the confirmation process is over.

Subscribe to TBN

Receive updates about new stories in the industry daily or weekly.

Subscribe to TBN

Receive updates about new stories in the industry.