The decision of Lawrence Summers to abandon his quest to chair the Fed is a good one. His past mistakes/conflicts of interest in opposing regulation of the finance sector should disqualify him and, in the end, it effectively did. Summers is untrustworthy in terms of apparent conflicts of interest and given his extreme right-wing politics his move to chair the Fed would endanger the US recovery.
Update: Here is The Nation on the same issue. I agree with all of these criticisms of Summers except for his alleged sexism. I’d condition my support for “free-trade” more than he did by excluding the export of pollution-intensive industries to poor countries simply because they have lowest willingness-to-pay to avoid it. It seems to me this is the wrong way of thinking about this issue. A summary:
- During Bill Clinton’s second term, Summers worked with then–Fed chair Alan Greenspan and then–Treasury Secretary Robert Rubin to block moves by Brooksley Born, who headed the Commodity Futures Trading Commission, to regulate the derivatives market. When that market began to deal in to include the toxic instruments that led to the 2008 financial market crisis.
- A year later, Summers led the fight to gut Glass-Steagall rules, which had provided an additional measure of protection against bank meltdowns.
- Early in Obama’s presidency, Summers resisted sufficient stimulus spending to jump-start the economy.
- Summers has always been a militant free-trade advocate, and he showed little interest in efforts to renew American manufacturing.
- Summers’s tenure at Harvard has remained a subject of clear controversy, with serious objections being raised with regard to his statements about women. The National Organization for Women complained about “Summers’ own history of misogyny—as president of Harvard he opined that women might lack an ‘intrinsic aptitude’ for science and engineering.”