At a dinner last week laden with economists, our discussion turned to who will replace Fed Chair Ben Bernanke. The consensus was Janet Yellen was the front runner, Roger Ferguson was the long shot . . . and then Lawrence Summers’ name arose.

Longtime readers know I have little respect for the former Treasury Secretary and Harvard President. Despite his alleged brilliance, he seems to exhibit what can charitably be described as the worst judgment of any economist ever in existence. Granted, discussing economists with poor judgement is an embarrassment of riches, but Summers manages to surpass that crowd in ways never previously imagined.

He is essentially a smarter version of Alan Greenspan — only lacking Greenspan’s keen judgment, insight and humility (in case it escaped your notice, this is sarcasm ).

Consider Summers “brilliant” track record:

•  He has consistently argued for privatization and deregulation of the financial sector;

• He oversaw the repeal of Glass-Steagall via the passage of the Gramm-Leach-Bliley Act;

• He approved the (previously illegal) merger between Citibank and Travelers;

• He oversaw (and indeed encouraged) concentration in the financial sector, thinking bulked up banks are a virtue. This led to the rise of the TBTF institutions (formerly known as mega-banks).

• He successfully fought Brooksley Born, then chair of the Commodity Futures Trading Commission, to rein in financial derivatives;

• He oversaw passage of the Commodity Futures Modernization Act of 2000, preventing ALL Federal regulation of derivatives; The CFMA also exempted derivatives from state insurance oversight and antigambling laws.

• Thanks to Summers, derivatives still have no minimum reserve requirements, no disclosure obligations, no transparency and no exchange listing / reporting requirements.

After he helped to create the financial crisis and collapse, Summers found himself uniquely situated to help repair the damage he wrought. But that would have required an admission of error and responsibility; instead, he compounded his errors by pushing for a small, ineffective stimulus plan.

Note we have not even bothering with his issues with woman, his lack of collegiality, his inability to work well with others, his boorish head strong personality, and his other professional failings.

Whats next after we put Larry Summers in charge of the Fed? How much further can he fail upwards . . . ?

 

 

See also:
Summers Said to Show Interest in Fed Chairman Nomination (Bloomberg)

Larry Summers and the Subversion of Economics  (The Chronicle Review)

I Come to Bury Larry Summers, Not to Praise Him… (New Yorker)

Larry Summers: “Mistakes Were Made,” But Not By Me (PR Watch)

 

Category: Federal Reserve, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

37 Responses to “Anyone But Larry Summers . . .”

  1. steveh18 says:

    no s**t, Dick Tracy

  2. constantnormal says:

    [chuckle]

    … at ease, BR, while I share your assessment of the incredible Larry Summers, there is no way that a strong-willed and smart president like Obama would ever nominate an egomaniac like Summers to a position of significant power, no matter how persuasive the president believes himself to be (and I think ourpresident has an exceedingly high opinion of himself — we generally do not get people in the Oval Office with any substantial capacity for humility, except by accident).

    So step back and take a few deep breaths, and RELAX, there ain’t gonna be a madman like Larry Summers at the helm of the Fed, unless we get another president as malleable as Dubya was.

    But you CAN worry about a Geithner-chaired Fed, Timmy is a known quantity to Obama, and if Obama thinks he needs a more compliant Fed, that’s the route he will take, rather than the unknown route of a dovish Yellen, who might turn out to have a mind of her own, dovish tho’ it might be … and Geithner could be pushed past the Senate by an army of bankster lobbyists, who share control of him woth Obama.

  3. pm2416 says:

    But he effectively managed the Winklevi in that movie…..

  4. Petey Wheatstraw says:

    Connections vs. competence.

  5. constantnormal says:

    … my own never-gonna-happen fav candidate to lead the Fed after Bernanke exits would be Sheila Bair, but she has wa-ay too much of a mind of her own for Obama to put her into that office, even if she could sweet-talk her way past the Senators acting as hand puppets for bankster lobbyists and get confirmed.

  6. jolietjim says:

    “Longtime readers no I have little respect for…”

    Another floater in your otherwise superb punch bowl.

    Measure twice. Cut once.

  7. abelenky says:

    Editing:

    “Longtime readers no I have little respect”

    “we have not even got to his issues with woman,”

    “is an embarrassment of riches, bit Summers manages”

    • constantnormal says:

      … cut the man some slack, nobody’s perfect … brush off the gravel and enjoy the sweet rolls … next you’re going to be wanting him to swap his photo for one of Heidi Klum … accept him as he is, a guy in a HURRY, trying to pack too much into too few hours in the day … would you rather he slow down and miss the important things? Be glad that these errors are in areas that you can easily detect and correct in your own minds …

  8. Petey Wheatstraw says:

    Any leader of the Central Bank should be a career bureaucrat, drawn from within a government agency. No bankers, no “economists,” no political appointees. Just another government worker counting their days to retirement. Max pay (and I believe it’s about $40,000 too much), is $199,700/yr.

    http://archive.opm.gov/oca/12tables/html/ex.asp

    The “experts” are far too industry/politically connected to exercise impartial decision making on behalf of the citizenry.

    • denim says:

      I would pick a historian. Much economics and politics is merely history repeating itself among the latest descendants of the previous screw uppers. Bernanke specialized in the history of the Great Depression and that is why he has succeeded in preventing Bush’s have mores from becoming the Second Great Depression.

      Well maybe a Utah banker would work out:

      http://en.wikipedia.org/wiki/Marriner_Stoddard_Eccles

      • sureseam says:

        “I would pick a historian” … yes well you could but you might end up with the likes of Gordon Brown (who has a PhD in History from Edinburgh). The risk is probably not worth it.

  9. VennData says:

    Sounds like just the guy to raise rates.

  10. Greg0658 says:

    memory serves he was the initial frontman for the Fukushima Daiichi crisis ..

  11. farmera1 says:

    So how does one start a social media/letter writing campaign to the Whitehouse? Any other ideas on how this could be done.

    Something along the lines Summers is the perfect (perfectly rotten that is) candidate for the Federal Reserve.

    Anybody got any serious ideas.?

  12. Moss says:

    Since he is part of the Democratic pantheon of economists and has already been inside the Obama administration anything is possible. Smart but not wise.

  13. MarkKlose says:

    Fortunately, Larry only appears on one short-list; his own.

  14. W T F says:

    President Obama has first hand experience dealing with Summers. He knows the score.

    If you haven’t read the book “Confidence Men” by Ron Suskind it’s worth your time. It reveals Summers essential nature which Barry has characterized to a T.

    I’m surprised anyone in the DC Beltway would even take a meeting with Summers.

    What a disaster of a human being.

    • rd says:

      Being a disaster of a human being is probably a premium qualification for him to thrive inside the Beltway. The non-disasters you think would be meeting with him are????

  15. RW says:

    Mathew O’Brian makes a good case but I doubt Obama is thinking in these terms: The POTUS’s economic thinking to the degree I can discern it seems conventional, conservative and relatively sympathetic to vested interests. His apparent preference for the factotum Geithner’s opinion over Romer’s expertise during the crisis makes me doubt Obama is capable of deeper or more principled reflection on the subject; Summers would not be a good choice I think but the (I hope very distant) possibility it could be someone like Geithner frankly gives me cold sweats.

    Why Christina Romer Should Be the Next Fed Chair

  16. Vitus Capital says:

    BR – you forgot: Summers was O’s initial top Econ advisor, as head of the National Economic Council, where he discouraged bank regulation and fought, successfully, a larger stimulus.

    DeLong manfully defends Summers against most criticism, making good points. One can tell it’s distasteful for DeLong to defend Summers (his former boss at Treasury), but not many will publicly defend a fallen-from-grace politico.

    Still, although Summers has laid relatively low since “moving on” from Treasury, his possible emergence is troubling.

    It would be great to find a way to successfully utilize Summers’ talents in forwarding the fortunes of the country. He -is- one of the smartest people out there. However, I do keep in mind that although I am allegedly substantially smarter that my wife – I get much higher scores on tests than she (SAT, GRE, etc) – she has a lot better judgement than I have.

  17. Frwip says:

    A generally fair and accurate description of Larry Summers’ career.

    His only brilliance seems to be his uncanny ability to dump the shit he sets in motion on somebody’s else lap, over and over again

    PS: And we may grudgingly grant him the occasional good turn of a phrase. Starting a research paper with “There are idiots. Look around you.” is … quite something.

  18. Crocodile Chuck says:

    Larry Summers as Fed Chairman: “Irony stands mute” (Jozef Stalin)

  19. Onemoretime says:

    Summers of course has a long history of failing upwards so it may be distasteful but still possible.

    I would put my money on Geithner. He’s having his rest and relaxation furlough and when it comes time to make the announcement I’m pretty positive he will be declared the “best most qualified.”

  20. chomen says:

    Pro tip: never have dinner with economists.

  21. financeboomer says:

    I have to agree with this post. Thanks for saying it.

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