Summers of our discontent
I have no doubt that Larry Summers can speak truth to power. Indeed, I’ve seen him yawn at power.
Once, when Vice President Joe Biden was talking to a small group at a holiday party, Summers yawned, checked his watch and walked away while Biden was in midsentence.
While he’s not exactly socialized — he had a lot of unhappy colleagues when he ran the Obama White House’s economic team — I have no doubt that Summers is genuinely smart and gets some credit for the policies that produced the recovery. I’m sure the imperious economist is more mellow than he used to be, because life has taught him he has to be.
But the idea that it is somehow historically inevitable that the chairmanship of the Federal Reserve should go to Summers, that it belongs to him, that he would be an enthusiastic enforcer of bank regulation to protect the little guy?
I have my doubts.
This idea is being pushed by the boys’ club around President Barack Obama, and also by the bullying cool kids, some of the Wall Street types like former Treasury Secretary Robert Rubin who paved the way for the country’s ruin. Larry’s loyal former protégée Sheryl Sandberg aside, it evokes a sexism of complacency — just a bunch of alpha males who prefer each other’s company and who all flatter themselves that they’re smart enough to know how smart Summers is.
These days, it’s impolite to mention that all those cool bankers that President Cool didn’t punish enough brought the country to the brink of disaster.
One person unafraid to recall it is the Divine Miss M, who has been trashing the Disheveled Mr. S in tweets this week, picked up by Washington Post economic columnist Neil Irwin.
34 AM — 10 Aug 2013
HUH. The architect of bank deregulation, which turned straitlaced banks into casinos and bankers into pimps, may be next Head Fed: Summers.
26 PM — 11 Aug 2013
Larry Summers, Mr. De-Regulation, has never stepped forward to say ... “Oops! My bad!”
Even Bill Clinton has offered an “oops,” saying he got bad advice from Summers and Rubin.
In the late 1990s, when the prescient Brooksley Born, then chief of the Commodity Futures Trading Commission, wanted to publicly examine derivatives, Summers, who was deputy treasury secretary, worked with Rubin and Alan Greenspan to block her.
Michael Greenberger, a University of Maryland law school professor and former Born lieutenant, told The Post that Summers called and said: “I have 13 bankers in my office, and they say if you go forward with this you will cause the worst financial crisis since World War II.” Instead, these bankers were behind the policies that caused the worst financial crisis since before World War II.
As The Times reported this week, when the 58-year-old Summers came to the Obama White House, he was worth $7 million; when he left at the end of 2010, he “jumped into a moneymaking spree” at a hedge fund and at Citigroup — a bank rescued by a government bailout — so he could be a gazillionaire by the time Ben Bernanke retires and the job is open.
His stuffing of his pockets within hours of leaving the White House job now makes it unseemly for him to lead the Federal Reserve in enforcing the important new regulations from the Dodd-Frank financial reform bill.
He is an exemplar of, rather than a solution to, the obscenely lucrative revolving-door problem mocked by Mark Leibovich in his new book, “This Town.”
The Fed is entering a new era when it is supposed to be getting tough on the banks, even if it means that the banks are smaller and less profitable and that shareholders make less.
Sure, Summers, the son of two economists and nephew of two Nobel laureates in economics, has a high IQ and inspired a great cameo bit in “The Social Network.” But there has to be somebody out there to run the economy who wasn’t a part of the culture that ran the economy into the ground.
Janet Yellen, the Fed’s vice chairwoman, has generally been more publicly aligned with Bernanke than Summers has been in using monetary policy to revive the economy. If the president passes over the trailblazing and more temperamentally stable Yellen to appoint Summers, he’ll be giving Larry some vindication on his infamous critique of women that helped get him ousted as president of Harvard — a job he got thanks to Rubin.
Does the fact that we’ve had no female Fed chairs and no female treasury secretaries mean that Summers was right when he said women are less likely to have the kind of brains that would allow them to get top jobs requiring math skills?
Is that what makes Larry Summers so brilliant?
Maureen Dowd is a columnist for The New York Times.