Unfortunately, the Fed has a long history of serving Wall Street while neglecting the rest of the country. Be they Democrats or Republicans, be they theorists or doers, past Fed chairs have tended to embrace the thinking of the free-market fundamentalists and free-trade absolutists who have created an economy characterized by declining wages and expanding income inequality.
The trouble is that, as Franklin Delano Roosevelt explained almost 80 years ago, "We have always known that heedless self-interest was bad morals; we know now that it is bad economics."
At an uncertain moment for the economy of the United States, and more importantly for the great mass of citizens who depend on that economy, the choice of a new Fed chair took on a higher degree of significance in the eyes of senators from both parties. So critical, for so many Americans, that at least some Democrats began placing principle before party loyalty.
That's why, as the speculation rose about the prospect that President Obama would select Summers, Democratic senators started announcing that they would vote with Republican critics of the administration to block confirmation of Summers.
As with Supreme Court nominations, nominations to chair the Fed must be confirmed by the Senate. That might not be a problem for many prospective nominees, even in a filibuster-frenzied Capitol. But when a significant number of populist Democrats indicated they would oppose Summers, prospects for getting from nomination to confirmation started to look tougher.
The objections expressed by key Democrats had historical and contemporary roots:
During Bill Clinton's second term, Summers worked with then-Fed chair Alan Greenspan and then-Treasury Secretary Robert Rubin to block moves by Brooksley Born, who headed the Commodity Futures Trading Commission, to regulate the derivatives market. When that market began to deal in to include the toxic instruments that led to the 2008 financial market crisis.
A year later, Summers led the fight to gut Glass-Steagall rules, which had provided an additional measure of protection against bank meltdowns.
Early in Obama's presidency, Summers resisted sufficient stimulus spending to jump-start the economy.
Summers has always been a militant free-trade advocate, and he showed little interest in efforts to renew American manufacturing.
Summers's tenure at Harvard has remained a subject of clear controversy, with serious objections being raised with regard to his statements about women. The National Organization for Women complained about "Summers' own history of misogyny -- as president of Harvard he opined that women might lack an 'intrinsic aptitude' for science and engineering."
"In short, Summers is simply the wrong person, male or female, to lead the Fed," argued NOW.
Like many progressive organizations, NOW expressed discomfort with the approach Summers has taken to core economic questions. "Summers' deregulatory zeal contributed directly to the Bush-era economic crash. Summers cannot be trusted to lead an institution that can do great good -- but also great harm -- to the economy overall and to women's economic security in particular," read a NOW action alert urging support for Yellen.
Progressive and populist Democrats who were in positions to do something about a possible Summers nomination shared the popular concern that the former Treasury secretary simply had not shown an inclination to steer the fed toward policies that are beneficial to the great mass of working Americans.
A key objection was that Summers defaults toward approaches that simply have not worked.
"I start from a position of being extraordinarily skeptical that his background is appropriate for the role of the head of the Fed," said Oregon Senator Jeff Merkley , a Democrat on the Banking Committee. "If you nominate someone who is a life-committed deregulator to be in a regulatory position and if you believe regulation is necessary to prevent fraud, abuse, manipulation and so forth, then there's a lot of questions to be asked: Why is this person appropriate?"
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
2
1
1
