- POSTED: 16 Sep 2013 06:17
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Former US treasury secretary Larry Summers withdrew Sunday from the race to succeed Ben Bernanke as chairman of the Federal Reserve, in a surprise announcement from the strongly tipped candidate.
WASHINGTON: Former US treasury secretary Larry Summers withdrew Sunday from the race to succeed Ben Bernanke as chairman of the Federal Reserve, in a surprise announcement from the strongly tipped candidate.
President Barack Obama confirmed he had accepted Summers' decision not to seek the pivotal economic post in a telephone conversation following weeks of speculation about his chances of the job.
Summers, a professor at Harvard and former president of the prestigious US university, cited fears of an "acrimonious" confirmation process as his reason for stepping out of the running to lead the US central bank.
The 58-year-old's chances of taking over at the Fed are widely considered to have been undermined by fierce criticism, including from key lawmakers, of his record as head of the Treasury during Bill Clinton's presidency.
Summers' opposition to the regulation of derivatives -- the often complex financial products blamed in part for causing the 2008 global economic crisis -- and his work on Wall Street had attracted particular scrutiny.
As well as working for Clinton at the Treasury Department between 1999 and 2001, Summers was Obama's chief economic adviser at the White House between 2009 and 2011.
The latter post had raised his prospects of taking over at the Fed, with several reports talking him up as Obama's preferred choice for the job.
In a statement following Summers' decision to withdraw, Obama praised the economist's performance in government in the wake of the financial meltdown at the turn of the decade.
"Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today," Obama said.
Summers issued a letter stating that his announcement came at "a complex moment in our national life," and that he had "reluctantly concluded" his route to securing the job was not tenable.
"Any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation's ongoing economic recovery."
Last week several Democratic senators on the influential Banking Committee indicated they would oppose sending Summers' nomination for the Fed to the full Senate for a confirmation vote, undermining Obama's chances of his favored candidate eventually securing the job.
Summers' lucrative work for a New York-based hedge fund and for Wall Street banks, which he would have been tasked with regulating had he been made chairman of the Federal Reserve, had also come under criticism.
Like many senior economic advisers in US political life, Summers has racked up millions of dollars in speaking and consulting fees from financial firms, feeding accusations that he would have been soft on Wall Street.
Earlier Sunday, Citigroup said Summers had stopped working for them as a consultant.
Summers has a reputation as a strong economist but has also struck many as overly brash, a man of sharp elbows in Washington's halls of power, with several key lawmakers arguing that a more conciliatory chair is needed to take over when Bernanke leaves his position, likely in January.
Current deputy Fed chair Janet Yellen had been seen as Summers' main competition for the role, with the White House recently noting that several other candidates were on a shortlist.
Summers' decision to bow out was welcomed by the Progressive Change Campaign Committee, a Washington DC-based political and consumer pressure group.
"He would have been an awful Fed Chair," said Adam Green, the group's co-founder.
"President Obama should appoint someone to lead the Fed who has not accepted millions in payments from Wall Street, and who will prioritize an economy that works for the little guy above further enrichment for the big guy."
Summers' academic life has run in tandem with his political ambitions, however while he was president of Harvard University from 2001-2006, he caused consternation with an allegedly sexist speech discussing why women were less represented in the sciences and engineering at universities.
That and other controversies eventually led to him leaving the job, after the university faculty voted a motion of lack of confidence in his leadership.