Summers Would Spark Confirmation Fight of the Century
By Simon Johnson - Sep 8, 2013
Throughout the Federal Reserve’s 100-year history, the Senate has generally deferred to the president’s choice of leader for the central bank. If Larry Summers is picked for the job, however, the debate around his nomination would be unlike any that has come before.
For reasons that make a great deal of political sense, some Republicans and more Democrats will resist the nomination. Such a roll of the dice by the Barack Obama administration could have short-term unsettling consequences for financial markets. Over time, whatever the outcome, the Summers nomination process will be viewed as a lesson in why and how American democracy works.
Democrats have major concerns about Summers’s record on regulation, in particular his role in deregulation in the 1990s, his defense of “free markets” in the 2000s, and his refusal to fully remove implicit subsidies for very large financial companies during the Dodd-Frank legislative process in 2009-2010.
There is a general perception that, if Summers is confirmed, the regulatory debate would somehow be closed. Anyone who holds this view hasn’t studied the Federal Reserve Act or thought much about the way in which the Fed chairman must operate in the political sphere.
By putting pressure on the Summers nomination, Democratic senators such as Sherrod Brown of Ohio, Jeff Merkley of Oregon and Elizabeth Warren of Massachusetts would be able to make broader points about the need for stronger regulation. If Summers was rejected, Fed Vice Chairman Janet Yellen would be an outstanding pick.
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http://www.bloomberg.com/news/2013-09-08/summers-would-spark-confirmation-fight-of-the-century.html
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