The Thinker: Rich Galen


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Mullings by Rich Galen
An American Cyber-Column By Rich Galen
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Summers' End

Rich Galen

Monday September 16, 2013


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  • Larry Summers will not be the 15th Chairman of the Federal Reserve.

  • Because you have a rich and full life without keeping track of who's in and who's out in Washington, DC, you might not have known that Larry Summers was being considered for the post of Fed Chairman, but he was.

  • How do I know that he will not be Chairman of the Fed? Because he has withdrawn his name from consideration.

  • A bit of background.

  • According to the Fed's webpage:
    "The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded."

  • We can only imagine the amount of coffee that came shooting out of the noses of the Governors when they read that last line.

  • In any event, the whole system was revised in 1933 as a result of the Great Depression, and then amended in 1935 to form the Board of Governors as it is still constituted.

  • The first "Chairman of the Fed was a man named Marriner Eccles who remains the only chairman of the officially, if redundantly, named "Board of Governors of the Federal Reserve Board" to have double letters in both his first and last names.

  • Larry Summers is a product of Washington. He has a Ph.D. in economics from Harvard � I'm waiting for you to finish growling � after graduating from MIT. He was the chief economist for the World Bank, Deputy Treasury Secretary (under Bill Clinton), then Secretary of the Treasury (Clinton), President of Harvard University (a wholly owned subsidiary of the Federal government), then Chairman of the National Economic Council under President Obama.

  • Going back to that President of Harvard University business, Summers infamously according to the Harvard Crimson, told
    "an economics conference Friday that the under-representation of female scientists at elite universities may stem in part from "innate" differences between men and women."

  • Some - even some women in the room - thought the remarks were taken out of context, but a year later, according to the Boston Globe,
    "facing a faculty revolt and eroding support from the university's governing board, [Summers] announced yesterday he will resign, ending the briefest tenure at the Ivy League school's helm in 144 years."

  • The comments have haunted Summers ever since. Call that speech Larry Summers' "Macaca Moment."

  • The current Fed Chairman is Ben Bernanke who was appointed by George W. Bush and re-appointed by Barack Obama. His term ends in January and there is the (now) usual Senate confirmation minefield to get through.

  • Keep in mind Summers was never nominated but he withdrew his name for consideration because the confirmation process was likely to be "acrimonious."

  • Part of the "acrimony" is being caused the next most mentioned name to be the next Fed Chairman is Janet Yellen, currently Vice Chair of the Federal Reserve.

  • Dr. Yellen got her Ph.D. in economics from Yale (not Harvard). Prior to her current position she was, a member of the Fed Board, the Chair of President Clinton's Council of Economic Advisors, and was the President of the San Francisco Federal Reserve Bank - thus she has experience at both the regional bank and the Federal Reserve Board levels as well as the rough and tumble of the White House.

  • I have no idea whether Dr. Yellen would be a good choice or a bad choice; but neither did I know (and I still don't know) whether Bernanke was a good choice or a bad choice.

  • Everything I know about economics I get from watching Squawkbox on CNBC in the morning.

  • Or by talking to Tony Fratto.

  • The proximate cause for Larry Summers' having withdrawn his name is three Democrats - Democrats - on the Senate Banking Committee indicated over the weekend that they would have a tough time voting to take his name to the Senate floor.

  • That would have meant that the White House would have had to lobby Republicans on the committee to vote for Summers and, as you may have heard over the past few weeks, the President is running a little short of political capital right now.

  • As I Tweeted last night: The toughest thing about the Summers withdrawal letter was having a WH staffer find him, stick it under his nose, and say "sign here."

  • Autumn doesn't official begin until September 21, but yesterday was Summers' end.

  • On the Secret Decoder Ring page today: Links to the Wikipedia entries for the Fed Chairman, and to Larry Summers' and Janet Yellin's bios; also a link to the Harvard Crimson and to the Fed's web page.

    The Mullfoto is from Africa a few months ago of a thief I captured on my digital camera.

    -- END --

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