This is an amazing, MUST-READ story in the FT. Check it out!
Larry Summers is a brilliant economist but as a practitioner he has made enemies. The left blame him for deregulation under the Clinton administration which paved the way for the banking crisis of 2008. Meanwhile, the right are critical of him in the early days of the Obama administration when he guided towards major stimulus of the economy.
Many prominent economists, like Nobel prize-winning Joe Stiglitz publicly favored Janet Yellon over Larry Summers. However, the tipping point was when a number of very powerful Democrat senators announced they would oppose Summers’ nomination for the chairmanship of the Fed. Others will cite Summers’ personality as not being suitable for the consensus building role at the Fed.
At another level, this story will be damaging for President Obama who had intimated that Summers was his preferred candidate for the Fed role. It will be seen as a sign of weakness that Obama could not get his way.
Personally, I have always felt that Janet Yellon is supremely qualified to take over as the chair of the Fed, probably one of the most powerful positions in the World.