What Larry Summers Needs to Do If He Wants to Lead the Federal Reserve

Treasury Secretary Tim Geithner and Larry Summers talk before President Obama signs the middle-class tax cut bill on Dec. 17, 2010, in Washington, D.C.

Pool photo by Olivier Douliery/Getty Images

It’s clear that Lawrence Summers really wants to chair the Federal Reserve and that a number of important people in the White House share this desire. Summers doesn’t plan to go down without a fight, and I’m hearing that he’s busy orchestrating a PR campaign on his own behalf. From what I’ve heard of it, though, the pro-Summers messaging is going to focus on the perception that it’s sexism that’s led to his rising star in the administration paired with the perception that he, personally, holds sexist views about women’s abilities.

Obviously I can see why people feel that allegations of misogyny carry more weight with the public than talk about monetary policy, but I think this is a mistaken approach. If Summers wants to get the job, either he or his supporters need to communicate something about his vision for the Federal Reserve’s substantive role. It’s true that sexism is more of a hot-button issue, but it seems to me that silence from both Summers and Obama about monetary issues is what drives the perception that the pro-Summers movement is about gender. After all, Janet Yellen is already sitting there as vice chair of the Federal Reserve, she has oodles of experience in central banking, she’s been the Federal Open Market Committee’s best forecaster, and she’s the candidate Wall Street both expects and wants. So why not pick her?

Well one very good reason to not pick her—a fantastic, wonderful reason—would be if Obama doesn’t want continuity in monetary policy. Perhaps Obama is frustrated with years of mass unemployment and below-target inflation and would like to see a substantially more stimulative policy put in place. Perhaps he feels that Yellen is too personally and professionally invested in the status quo.

But is that what Summers wants? My guess is no. Before this controversy started, my impression was that Summers and Yellen has essentially identical views. Since people have started looking into it, Summers looks perhaps a bit more hawkish than Yellen. But part of his strategy has been to avoid any contentious newsmaking statements on monetary issues. It’s a strategy that perhaps made sense at the time, but I think the sexism complaints in part reflect that strategy backfiring. It makes it seem like he’s being promoted for no real reason. If Summers has some strong ideas about how the Summers Fed is going to step up and help heal the economy, giving some indication of that would be the best way to dispel the doubts around his candidacy. A lot of folks out there are developing very strong opinions on this issue in the absence of clear evidence about what the stakes are. Getting supportive statements from senior women he’s worked with will do less for Summers than persuading people he has good ideas about how the job should be done.