Tags: Summers | Yellen | Fed | Wall Street

WaPo: Summers Epitomizes Wall Street's Revolving Door

By    |   Thursday, 01 August 2013 08:12 AM

Larry Summers' potential nomination as the next Federal Reserve chairman shines a spotlight on the revolving door between Wall Street and Washington, argues Washington Post columnist Katrina vanden Heuvel.

Summers is another top official moving easily between top government posts and high-paid consulting jobs for Wall Street firms, says vanden Heuvel, editor and publisher of The Nation magazine.

As top economic advisor in the Obama administration, Summers was instrumental in bailing out large banks while blocking attempts to reform them or limit their size. He then made millions (again) as a consultant, this time for Citigroup, which the government had rescued during the financial crisis.

Editor's Note:
Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

Summers, a Treasury Secretary under President Clinton, also worked for the large hedge fund D.E. Shaw & Company from 2006 to 2008.

"For the anointed, this unseemly revolving door isn’t considered corrupt," she writes, noting that his supporters say his consulting work gave him invaluable experience. "But his opponents know different."

His nomination represents the control the Wall Street wing of the Democratic party has on the White House and its economic policy, the columnist says.

"Summers is a poster boy for this Wall Street wing — literally," she states, noting his record for supporting banking deregulation.

"The opposition to Larry Summers isn’t simply an objection to the old boys club. It represents an incipient but growing reaction against the old ways of doing business," she says, adding that Democratic and Republican administrations have supported large corporations and the wealthy while the middle class has been sinking.

"Increasingly the cloistered club and the revolving door seem in service less of the public than of the few. The pushback against the Summers nomination may be an inside-the-beltway scuffle, but it hints at a much more potent backlash."

Nineteen Democratic Senators and one independent sent a letter to the White House, urging President Obama to nominate Federal Reserve Vice Chairman Janet Yellen as the chairman to replace Ben Bernanke, who's expected to retire and the end of the year.

"If Summers is the nominee, I sure would have a lot of questions to ask him,” said Sen. Durbin of Illinois, who signed the letter, Bloomberg reports. "He’s served several administrations, and I’d like to hear his point of view on the role of the Fed in terms of helping the middle class and creating jobs."

The letter is "unprecedented," says David Gergen, a Harvard University Kennedy School of Government professor who has advised presidents.

"Usually that advice is given in private," Gergen tells Bloomberg. "It's never pretty when a president faces tensions within his own party about an appointment and is caught in the middle."

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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Larry Summers' potential nomination as the next Federal Reserve chairman shines a spotlight on the revolving door between Wall Street and Washington, argues Washington Post columnist Katrina vanden Heuvel.
Summers,Yellen,Fed,Wall Street
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2013-12-01
Thursday, 01 August 2013 08:12 AM
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