Since the spring, it has been reported that former Treasury Secretary Larry Summers was a frontrunner to succeed Ben Bernanke as Chairman of the Federal Reserve. For the past few weeks, support for Summers ramped up, while Vice Chair Janet Yellen took a backseat to the Washington and Wall Street insider.
In a surprise to many, the White House issued a statement late Sunday and confirmed that Summers will not be in contention to run the Fed as he dropped out of the race due to unspecified reasons at the time.
“Earlier today, I spoke with Larry Summers and accepted his decision to withdraw his name from consideration for Chairman of the Federal Reserve,” President Obama said in the statement. “Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today.”
It has now been reported that Summers wrote a letter to the president explaining that he came to the conclusion after realizing that the nomination process would be “acrimonious and not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation’s ongoing economic recovery.”
For the past few years, a number of Democrats have opposed Summers because of remarks he made in 2005 that women had less innate inability in maths and science than their male counterparts.
Nevertheless, analysts concur that it seems much more likely that Yellen will be appointed by the president. However, a former Bush administration official told CNBC that keeping Bernanke on for another term is definitely a possibility, considering the controversy surrounding Summers and the unenthusiastic support for Yellen.
“The safest choice is Yellen,” said Tony Fratto, former White House press secretary in the George W. Bush administration. “I think one choice nobody has really talked about, which I really believe is still a possibility until someone rules it out, is that you keep the best guy for the job in the job—that’s Ben Bernanke.”
The president is expected to make his decision sometime this month. Bernanke’s term is slated to end Jan. 31, 2014.