Former Harvard president Lawrence Summers announced yesterday afternoon that he was withdrawing his name from the contest to succeed Ben Bernanke as chairman of the Federal Reserve. Summers came under scrutiny after he made remarks several years ago at a conference where he said that women were underrepresented in academia because of “innate’ differences, a comment which caused at least one MIT biologist to feel physically ill.
The Fed Chairman holds one of the most important jobs in the United States by setting its monetary policy—he or she will figure out the Fed’s strategy to boost economic growth and reduce unemployment. But with Summer’s name (thankfully) out of this race, who will take over the Fed after Bernake’s term ends early next year?
The news leaves the Fed’s current vice chairman, Janet Yellen, as the clear front-runner for the job. Yellen is widely perceived as likely to be more cautious about winding back the Fed’s stimulus program, which Summers was more likely to scale back. As a result of Summers withdrawing his name, stock and treasury futures soared this morning.
Yellen has garnered substantial support among Democrats in Congress and economists—just last week, four hundred economists put their names to an open letter calling on President Obama to nominate her. Summers was the target of opposition, with Jon Tester, a Montana Democrat who sits on the Senate Banking Committee, said he would vote against Summers if he were nominated, similar to three other Democrats on the committee—Jeff Merkley, Sherrod Brown, and Elizabeth Warren who are publicly opposed Summers.
A Yellen nomination is also notable because no woman has previously been the Fed chairman. Additionally, Obama has been under fire because his administration hasn’t made any progress in appointing women to top governmental positions. Obama has named no more women to high-level executive branch posts than the Clinton administration did almost two decades ago.
“I was very surprised the president didn’t understand how much damage he would do to his legacy if he passed over a better qualified woman in order to put a less qualified man in place who was his friend,” said Terry O’Neill, president of the National Organization of Women.
At this point, it’s unsure if Summers withdrew from his accord of from pressure from the President. But it’s likely that they both knew that a Summers nomination would be an uphill battle if it happened. If Obama had been flying high, with a tight grip on Congress, it’s possible that he would have decided to nominate Summers regardless of the consequences. But Obama isn’t exactly cruising along at the moment–his approval ratings are sagging, and he’s about to enter another season of squabbling with Congressional Republicans over the budget, funding Obamacare, and the debt ceiling. In such circumstances, the last thing that the President needed was a bitter nomination fight in the Senate, especially one against his own party. With that being said, though, it looks to be a good move for everyone.