Larry Summers has decided not to fight for the post of the head of the U.S. Federal Reserve and thereby not to provoke a fierce battle in the Senate. Summers strongly stands for the deregulation of the financial sector.
Former U.S. Treasury Secretary has withdrawn his candidacy for the post of chairman of the U.S. Federal Reserve System a few days ago.
In a letter to U.S. President Barack Obama, Summers notes that the process of approval of his nomination would pass in a "severe and acrimonious atmosphere" that would not serve the interests of Fed itself, the U.S. administration and objectives of recovery of the U.S. economy.
It is known that against Summers argued a number of influential Democrats in the Senate. They recollected his numerous statements in favor of deregulation of financial markets, as well as his close ties to Wall Street. According to many experts, Summers for many years remained true to the theory that "the markets will remain markets; simply do not disturb them."
"Contractors and lenders know more about those with whom they deal, they know better about the ability to assess the risks and have more incentives than any state regulator." he said in defense of the claim that the private market will cope with the regulation of financial markets without government assistance.
Obama said that he already got Summers’ statement. However, he called him a key member of his team, which helped the United States to deal with the most serious crisis since the Great Depression. The U.S. president also said that he will always be grateful to Summers.
The futures market for the shares reacted to the statement of Summers by increasing in quotes because he was considered a supporter of a more rapid withdrawal of stimulus measures by the Federal Reserve.
Forex market reacted to that news by weakening of the U.S. dollar against all major currency pairs.
The powers of the current Fed Chairman Ben Bernanke will expire in January 2014. Summers, who during his career has also held the post of economic adviser to the president, was considered the favorite in the fight for the post of head of the Federal Reserve. Now the favorite for this post is the current vice chairman of the Federal Reserve Janet Yellen.
However, according to The Wall Street Journal, despite the support of her candidacy in Congress, Obama doesn’t like the fact that Yellen’s candidacy is lobbying by many in the US society. Maybe he will learn some other candidates.
Thus, Obama had a conversation with a former Fed vice chairman Donald Kohn. Another option - a former Finance Minister Timothy Geithner. However, according to Bloomberg, he does not want to go for this job. Among the "dark horses" is Stanley Fischer, an American, who until recently was the head of the Central Bank of Israel, and before that - the first deputy head of the IMF. Another candidate is Roger Ferguson, also a former vice chairman of the Fed.