by Moira Herbst, The Guardian, 12 August 2013
Why would we want a key advocate of the banking deregulation that brought us the great recession to head the Federal Reserve
Larry Summers is has been confirmed by President Obama as a leading contender to be the next chairman of the Federal Reserve. Photograph: Virginia Mayo/AP
As a general rule in life – and certainly, in applying for a job – your record counts. If you’ve had a history of alienating people, being consistently wrong on the biggest issues in your field and screwing up – say, by helping set the stage (pdf) for the worst recession since the Great Depression – it’s time to look for a new career.
But that’s not, apparently, how life works out for Larry Summers, the fervent champion of deregulation and paid Wall Street consultant confirmed in last week’s presidential press conference to be a leading contender as Obama’s pick for the next chairman of the Federal Reserve.
That’s really too bad, because if Larry Summers replaces Ben Bernanke in what is the top economic post in the largest economy in the world when Bernanke steps down in January, we – meaning the overwhelming majority of American workers and taxpayers – will all likely suffer the consequences.
Doubts about Summers’ fitness for the job abound. A paid consultant to Citigroup, hedge fund DE Shaw and other companies, he is immersed in Wall Street both personally and professionally, posing the question of how he can possibly be trusted to regulate banks. He was also famously among the pushers of the deregulatory obsession that gripped Washington in the 1990s and early 2000s, which sowed the seeds of the financial crisis that cost our economy at least $14tn.
Let’s also not forget the massive risks he took with Harvard University’s endowment while serving as president, which cost the university more than $1bn, and his astonishing comments on women’s lack of “intrinsic aptitude” in math and science.
Then, there’s his defense of Enron during the California energy crisis. And not forgetting the weird, offensive memo he signed while chief economist at the World Bank that suggested dumping toxic wasted in third world countries….
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