Obama defends Summers from critics

Jul 31, 2013, 10:28 PM EDT
REUTERS/Molly Riley


WASHINGTON (AP) — Speaking up for a contentious former aide, President Barack Obama pushed back Wednesday against liberal Democrats who are urging the president not to pick Lawrence Summers to run the Federal Reserve.
In a closed-door session with House Democrats, Obama offered what participants in the meeting described as a keen defense of Summers after being pressed by Rep. Ed Perlmutter of Colorado about his controversial consideration of Summers to replace the Fed's outgoing chairman, Ben Bernanke. The defense continued at the White House, where press secretary Jay Carney said Summers had "stood shoulder to shoulder" with Obama during an economic crisis.
"He made decisions and put forth the policies that helped reverse the tragic economic decline that this country faced in the beginning of 2009," Carney said, adding that Obama's kind words about his former aide shouldn't be misconstrued as an omen about whether Obama would pick him for the top Fed post.
The head of the National Economic Council during Obama's first term, Summers served as treasury secretary from 1999 to 2001 under President Bill Clinton, and his performance in that role drew criticism from liberals who remain unhappy with Summers' push to deregulate financial markets.
"It would be a tragic mistake to nominate anyone as chair of the Fed who continued those failed policies," said Sen. Bernie Sanders, I-Vt., one of the most liberal members of the Senate. Sen. Dick Durbin of Illinois, a member of the Senate Democratic leadership, has said he would have numerous questions for Summers before being able to support him.
Obama's pending decision has attracted widespread attention and sparked substantial controversy, in part because of the major role the Fed chairman will play in managing an economy still struggling to recover from the recession.
Summers' critics have alleged he's too cozy with big Wall Street banks. Women's groups have also bristled over comments Summers once made questioning their abilities in math and science during his tenure as president of Harvard University. A few dozen female Democrats in the House have signed a letter urging Obama to instead pick current Fed vice chair Janet Yellen.
Seeking to lower expectations about an imminent announcement, the White House said Obama will not name a new Fed chair until the fall. Obama has said he's looking for a chairman who will take ordinary people's needs into account when setting monetary policy.
As he defended Summers to House Democrats on Wednesday, Obama also mentioned two other names as possible Fed candidates: Yellen and Donald Kohn, the Fed's former vice chair. And in a parallel meeting with Senate Democrats, the president said he had already interviewed some candidates for the job, though he did not specify those candidates by name.
"Some of my senators have been involved publicly in directing the president's attention to someone else," said Senate Majority Leader Harry Reid, D-Nev. He called Summers a long-time friend and a competent person but said the Democratic caucus will support whomever Obama picks. "He has a long list of people he's talking to," Reid said.
AP White House Correspondent Julie Pace contributed to this report.
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Copyright 2013 The Associated Press.