Ezra Klein has the news today that Larry Summers, who has long been considered as a possible replacement for Ben Bernanke, is now the front runner for Fed chair. Klein says that through his recent conversations with people close to the nomination process he’s learned that both President Obama and the financial markets seem to like Larry Summers, and that these conversations have convinced Klein that Summers is on the path to becoming Bernanke’s replacement.
We strongly oppose Summers, and so as soon as we read the news from Klein we set out to write a post explaining why he shouldn’t be Fed chair.
In the process of pulling together sources for this post, we came across the piece “Three reasons why Larry Summers should not be the next Fed chaiman” by Matthew Phillips at Quartz, and we realized that each point we planned on making was perfectly detailed by Phillips already.
Here are the three reasons:
1. He was a big part of the Clinton-era deregulatory push that led up to the financial crisis
2. He was especially wrong about derivatives
3. He was hostile to warnings about the financial crisis
One could also add the fact that he lost $1.8 billion dollars for Harvard by forcing the university into a stupid investment strategy.
The truth is, while Larry Summers has some amazing credentials (he was a tenured Harvard professor at 28! he’s won academic accolades!), he clearly thinks he’s a big deal, and he makes enormous bets (mostly with other people’s money) because of it. He has been consistently wrong on matters of monumental importance (see what he said about derivatives, for details), and now he wants to head what may be the most important economic position in the world.
This administration would be foolish to let it happen, and we strongly hope it doesn’t.
For more, see:
Stop Larry Summers From Messing Up Again from The Nation
Next Fed Chair: Not Larry Summers from Demos
Three reasons why Larry Summers should not be the next Fed chaiman from Quartz