Larry Summers Has Another Fan in Robert Scheer

     Or not so much. Here is what The Great American Stickup has to say about Summers:

     "The idea that Barack Obama would still consider appointing Lawrence Summers to head the Federal Reserve rather than order an investigation into this former White House official's Wall Street payments, reported Friday by the Wall Street Journal, mocks the president's claimed concern for the disappearing middle class. Summers is in large measure responsible for that dismal outcome, and twice now, after top level economic postings in both the Clinton and Obama administrations, he has returned to gorge himself at the Wall Street trough."

      "As Clinton's Treasury secretary, he pushed for radical deregulation allowing investment bankers to take wild risks with the federally insured deposits of ordinary folks, a disastrous move compounded when he successfully urged Congress to pass legislation banning the effective regulation of the tens of trillions in derivatives that often proved to be toxic."

      "The first direct result of those new laws was the mammoth merger that created Citigroup. Eight years later, the federal government had to save Citigroup from bankruptcy brought on by its leading role in the sale of those toxic mortgage-based derivatives, to the tune of $45 billion in taxpayer funds and backing $300 billion of the bank's bad paper."

     http://www.huffingtonpost.com/robert-scheer/gag-me-with-lawrence-summ_b_3674346.html

     He continues to cash in on Wall Street:

     "At that time, Citigroup paid Summers -- teaching at Harvard and yet hustling as a Wall Street consultant -- $45,000 for a lecture, a piddling amount compared with the $135,000 he got per talk from Goldman Sachs. In all, while he was advising candidate Obama during the 2008 election season, Summers made off with $8 million in Wall Street compensation, with the lion's share coming from the D.E. Shaw hedge fund."

     "Some might argue this is ancient history, but as the Wall Street Journal reported, Summers, after serving as a top economic adviser to Obama, has done just as well on his second passing through the revolving door between Washington and Wall Street. He rejoined the D.E. Shaw hedge fund, not having done anything to inconvenience its operation while in government, and got a gig with the operator of Nasdaq and other heavy hitters."

     "The Journal also revealed that Summers re-entered service with Citigroup, but neither he nor the bank has revealed his current rate of pay. The Journal did report that Summers has been paid more than $100,000 per speech for some of his recent talks to the financial industry goliaths. The newspaper also noted that at one Citigroup forum in March, "Mr. Summers expressed surprise about the persistent backlash in Washington toward big banks. ... "

      Is this the guy you want executing the new Dodd-Frank rules? Scott Sumner weighs in:

      "There’s been a lot of discussion of the relative advantages of Yellen and Summers, but most of it has missed the point.  Here’s one commonly expressed view:

While Summers’s views on monetary policy aren’t “totally clear,” he would probably be “somewhat less dovish than Yellen,” putting more emphasis on containing inflation than the current Fed vice chairman, said Michael Feroli, a former Fed staff member who is now chief U.S. economist for JPMorgan Chase & Co. in New York.

      "In fact, inflation will run at about 2%, or a bit lower, regardless of which person is picked.  That’s not the issue."

        Ezra Klein offers a different interpretation:

The two leading candidates for the job are Janet Yellen, the current vice chairman of the Fed, and Larry Summers, the former Treasury secretary and an economics adviser to President Barack Obama. When it comes to monetary policy, they don’t differ drastically. Both support the Fed policy to maintain low interest rates and continue asset purchases — no premature“tapering” — until unemployment falls significantly.

     "Klein goes on to argue that the most important differences are likely to occur in the area of regulation.  But in my view the regulatory role is of trivial importance compared to the money policy role.  Indeed the two should be separated. Klein seems to agree on the separation point:

There just isn’t a perfect candidate to be both the nation’s top central banker and the top financial regulator. And because the Fed chairman’s central banker role is pre-eminent, the regulatory aspects of the job tend to be discounted.

It would be better to elevate the power and visibility of the vice chairman for supervision so that the president and the Senate could just choose the best financial regulator on offer. Right now, the position’s powers aren’t clearly defined, and the Obama administration hasn’t even bothered to name an official candidate.

     "The real reason not to appoint Summers is competence.  Ben Bernanke had a long paper trail indicating that monetary policy remains highly effective at the zero bound.  Summers has a paper trail suggesting that monetary policy is not effective at the zero bound.  Given that we are likely to spend a good share of the 21st century at the zero bound, Summers is not qualified for the post.  Would you want to make someone captain of a cruise ship who did not believe that turning the steering wheel caused the direction of the ship to change?  Especially when there was overwhelming empirical evidence to the contrary?"

     http://www.themoneyillusion.com/?p=22682

     It's possible Sumner could be right about Summers on monetary policy-at a minimum we just don't know enough about what his monetary policy would be So it's not unreasonable to expect the worst as Jeff Madrick does:

      http://diaryofarepublicanhater.blogspot.com/2013/08/who-wants-to-defend-larry-summers.html

     However, I don't agree with him about the regulatory role. Indeed, that he thinks the regulatory role is of trivial importance may be because he agrees with Summers that deregulation wasn't a big cause of our problems. Sumner perhaps is one of the few diehards who still want to assure us that the market can police itself, of course, if the Fed maintains a adequate nominal GDP trend, all is right in the world-even Greenspan admitted that system broke down back in 2008. It's possible that it could be better to separate the monetary and regulatory role. However, that's not in the cards right now. So the Fed Chairman needs to be strong on that. 

      Maybe Summers would be, but can you honestly say you're confident of this? How can anyone?