Deputy Treasury Secretary Larry Summers was a little over halfway into his testimony in July 1998 when he acknowledged the degree to which his actions undermined the independence of the Commodity Futures Trading Commission (CFTC).
As Summers told a Senate committee, referencing his conflict with Brooksley Born over regulating derivatives: “We understood the seriousness of making this proposal. To question an independent agency’s concept of its jurisdiction and then to propose legislation that would temporarily curtail that agency’s ability to act is not something we do lightly. We concluded, however, that such legislation was necessary.”
The last two weeks have seen a flurry of commentary on the relative merits of Larry Summers and Janet Yellen as potential candidates for the next chair of the Federal Reserve. Some of the criticism about Larry Summers comes from his role in 1990s deregulation of finance. His fight with Brooksley Born of the CFTC over the regulation of derivatives particularly stands out.
Commentary by The Secular Jurist: We Americans need to press President Obama to explain why he is fighting so hard to get Larry Summers appointed as Chairman of the Federal Reserve. Some have surmised that he is just showing support for a loyal friend. Others claim he is worried that Wall Street might destabilize the financial markets if they don’t get a Fed Chair who will do their biding. The most cynical opinions contend that Obama’s presidency is simply subordinate to the real political power in America and the world – a global plutocracy headed by the big banks.
In any case, Janet Yellen is the more qualified candidate by virtually every measure. She deserves the nomination based on her technical merits alone. As the political heat rises on President Obama’s very important Fed Chair selection, these must be turning into the “dog days” of Larry Summers.