Issue of the week: Why Summers bowed out

I didn’t see this coming, said Megan McArdle in Bloomberg.com. Larry Summers’s decision to withdraw from consideration for the Federal Reserve chairmanship “is obviously something of a coup for the progressive headhunters who were determined to bring down his nomination.” But while the post isn’t a minor one, “the fervor over the identity of the next Fed leader has always struck me as out of proportion to the actual importance of the pick.” Ben Bernanke was a player because he presided during the financial crisis. “The next central banker will not have that kind of power, in part because Congress has moved to take it away.” The last few years have led people “to focus too much on the person sitting in the boss’s chair, and to underweight the institutional inertia that constrains that person’s ability to radically shift direction.”

Summers “may not have been an ideal candidate,” said Jonathan Chait in NYMag.com, but he wasn’t a bad one, either. The “liberal mutiny” against Summers arose mostly from reasons that fall at President Obama’s feet rather than his own. It started with “frustration with Obama’s record on gender,” as reflected in his heavily male administration. It’s too bad Summers had to “bear the brunt of backlash against this overarching trend,” but perhaps it was inevitable—especially since he “was the apparent choice over a more qualified female.” Liberals also punished him for “Obama’s mediocre financial-reform record,” which really has its roots in the anti-regulatory stance of the Clinton presidency, in which “Summers played a notorious role.”

This has been an embarrassment for both Obama and Summers, said Peter Coy in Businessweek.com. But it’s “only a one-ring circus.” Most American voters don’t really know what the Fed does, “certainly not enough to develop strong opinions” about monetary policy. The president didn’t help matters by floating Summers, whose controversial past and perceived arrogance made him a divisive choice from the start. But it should give everyone pause that choosing the Fed chairman, long a matter decided primarily on competence, has become so overtly political—in part, no doubt, because of the Fed itself and the “extreme measures it took during and after the financial crisis.”

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This may just be a case of Rubinism fatigue, said Kevin Roose in NYMag.com. Summers is the last in a long line of disciples of Clinton-era Treasury Secretary Robert Rubin who have “scooped up nearly every position of influence they’ve set their eyes on.” Rubin’s fervor for deregulating Wall Street in the 1990s has come back to haunt Summers now. “To the intellectual Left, Summers’s Rubinism boiled down to the fact that, in their eyes, he’d helped Wall Street run amok.” The backlash hasn’t just hit Summers. Treasury Secretary Jack Lew, “currently the highest-ranking Rubinite in government,” nearly had his nomination derailed, too. “Whether because of the increasing influence of reformers like Elizabeth Warren, or simply the Left’s growing unease with the economic status quo,” the Rubin brain trust has become “radioactive.” That’s why Obama is now looking elsewhere.