Summers over

So Larry Summers will not be the next chair of the Federal Reserve. He has withdrawn his name from contention, stating that the confirmation process would be too acrimonious. Whether he chose to do this on his own or whether president Obama nudged him to do so because he could not afford another bruising fight with Congress and his own party supporters who objected to Summers is not clear.

The opposition to Summers, especially among Democrats, just kept getting stronger, even though Obama kept sending signals that he was the one he really wanted and to back off on criticizing him. Although I thought it was likely that Obama could have forced him in over these objections, Felix Salmon thinks that he couldn’t, that the numbers just weren’t there for approval by the Senate Banking Committee, and that Summers was just bowing to reality.

Salmon said that the White House has been campaigning for Summers for months and they are likely to be angry about this defeat. But if Obama had tried to force the issue, he would have further alienated those in his party who were already upset with his needlessly warlike moves on Syria. He needs all his allies on his side for the coming debt ceiling battle with the Republicans.

But don’t lose any sleep worrying that Larry Summers will have to go on unemployment at the end of Obama’s term. He will be scooped up in the gentle embrace of Wall Street for whom he has long been such a loyal servant, and rewarded handsomely for all the financial deregulation that he implemented that enabled them to make vast profits while ruining the nation. As Neil Barofsky discovered when he went to Washington to become the overseer of the TARP bailout (I reviewed his gripping book Bailout: How Washington Abandoned Main Street While Rescuing Wall Street here), many of the top people in the Treasury Department and the White House economic team are constantly auditioning for lucrative Wall Street careers for the time when they leave government. That is one of the ways by which the oligarchy controls the system.

Wall Street looks after its own.


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