The Incredible Shrinking Case For Summers

Former US Treasury Secretary Lawrence Summers speaks during a financial and economic event discussing the financial crisis at the London School of Economics (LSE) in London on March 25, 2013.

Photo by JASON ALDEN/AFP/Getty Images

One argument for Larry Summers over Janet Yellen as Federal Reserve chair is that Summers—an East Coast operator with ties to the hedge fund industry—has credibility with financial markets in the way that an academic and bureaucrat living in the Bay Area doesn’t. But when CNBC surveyed the Street that’s not what they found:

Yellen also beats Summers when CNBC asks participants who the president should nominate, with 50 percent choosing Yellen and 12.5 percent saying he should reappoint Bernanke. Even write-in candidate John Taylor, the Stanford University economist, beats out Summers on who the president should nominate.

Claims that he’d pursue financial regulation more seriously than people think seem undermined by the fact that he’s done not-previously-disclosed consulting for Citi since leaving the White House on top of his well-known gig with D.E. Shaw.

But perhaps Summers’ expertise on monetary policy is unique and exactly what the country needs? Well why not see what Summers himself said about monetary policy at an April 2012 event sponsored by the Stanford Institute for Economic Policy Research:

“I will leave the question of monetary policy to John [Taylor] where he is an expert. I don’t think the question of whether the Fed was wise or was unwise during the noughts bears on the question of whether government caused our problems. The Fed’s job is to set monetary policy and it may or may not have done the right job. But I will speak to the question of fiscal policy in the wake of the crisis.”

Obviously Summers is playing coy here, but you really do have to ask what justification there could be for the idea that the country’s top monetary policymaker should be someone who’s not comfortable speaking publicly about monetary policy?