Think Obama Wants Larry Summers as Fed Chair?

Obviously I’ve never met either one of them, but I sincerely, sincerely doubt it.

I don’t think Obama has anything against Larry Summers personally. It probably is true that they have a friendly relationship. But does Obama want him as Fed Chair…? Highly unlikely.

Then what is all this press about Summers?

The investment banks have a powerful lobby – far too powerful – and they are just as entrenched with the Democrats as they are with the Republicans. Actually, probably more entrenched with the Democrats. Like most things in politics, it is an odd relationship. There are wings in both parties that despise the investment banks and the central banking system in general. The Ron Paul libertarians don’t like it, and the socialist leaning Dennis Kucinich types don’t like the investment banks either.

Where Obama fits

I don’t think Obama particularly likes the investment banks either, which is a good sign.With Bernanke as Fed Chair and Jack Lew as Treasury Secretary, we currently have leadership in these institutions that are relatively free of ties with the investment banks.  It would be good to keep it this way.

Summer is the investment bank guy

The investment banks don’t want Yellen. They would love Summers. Obama doesn’t want to give them Summers, but he has to seem like he is cooperating with this lobby that is so important, especially to many other Democrats. Obama is done in a few years, but other Democrats will need that investment banking money.

So how do you navigate a situation like this?

Why is Larry Summers now all over the news? I’m not sure. Perhaps he is being purposefully leaked, with Obama knowing there will be a public backlash against him. This way Summers becomes unpopular on his own, and the investment banks can no longer blame Obama for turning him down. In this case, Summers is shut down by public sentiment, Yellen gets in, and the Democrats don’t seem like they have actively and aggressively shunned the investment banking lobby.

Or perhaps this whole story has been fabricated by the media reading too much into the wording of Obama’s speeches. There are hundreds of possibilities.

But I am quite sure Obama doesn’t want Summers as Fed Chair, and it is extremely unlikely that Summers will get the job.

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