comments_image Comments

7 Reasons to Fight Obama on Picking Out-of-Touch Crony Capitalist Larry Summers as Fed Chair

If enough Democratic senators proclaim their willingness to filibuster Summers’ nomination, the President might reconsider his support.

Continued from previous page


Kurt Eichenwald reveals in his 2005 book "Conspiracy of Fools" that in 2000, then-California Gov. Gray Davis suspected Enron’s involvement in the energy fiasco and pleaded for help to then-Treasury secretary Summers. Summers dismissed Davis’s concerns, and together with then-Fed Chairman Alan Greenspan, told Davis that the problem was really over-regulation and advised Davis to pipe down and not scare off Enron and other power suppliers.

Later, as the crisis raged on, Summers, Greenspan, and Enron CEO Kenneth Lay had a video call with Davis in which Summers praised Enron and suggested that what California really needed to do was loosen environmental regulations in order to quickly build more power plants.

Fortunately, Davis did not listen to Summers, and soon the world knew that his suspicions were correct: Enron had been running a gigantic fraud in California's energy market while its traders exchanged jokes on how they were stealing from poor grandmothers in the state.

The crime spree and subsequent implosion of Enron was a dress rehearsal for the financial crisis. Larry Summers didn't get it then that deregulation was a danger to the public, and there's no indication that he gets it now.

6. His environmental record is frightening.

A look at Summers record on global economic issues reveals both his disturbing attitude towards the world’s have-nots and his deranged thinking on environmental issues. While chief economist at the World Bank, he oversaw programs that hurt people throughout poor countries, requiring them to focus on repaying foreign debt over vital concerns like health and education.

Back in December 12, 1991, Larry Summers was chief economist for the World Bank and signed a famous internal memo that was leaked to the environmental community. The memo explained why dumping toxic waste in third-world countries would actually benefit them economically, suggesting that life and health are worth less in poor countries than in rich ones.

After the outrageous memo became public, Brazil’s then-Secretary of the Environment Jose Lutzenburger expressed his shock: “Your reasoning is perfectly logical but totally insane… Your thoughts [provide] a concrete example of the unbelievable alienation, reductionist thinking, social ruthlessness and the arrogant ignorance of many conventional ‘economists’ concerning the nature of the world we live in…”

Later, during the Clinton administration, Summers set himself as an opponent to climate action and argued against the Kyoto Protocol to decrease carbon emissions. Under Obama, he continued to warn of potential economic risks of aggressive efforts to limit carbon emissions.

Understanding the threat of climate change and the impact of poisons and pollution on humanity ought to be givens for someone in a position as important as Fed chair. Summers' position reveals a great deal about his cast of mind and who he worries about.

7. He's an out-of-step Democrat.

On September 1, David Leonhardt of the New York Times reminded readers that a Democrat has not led the Fed in a quarter of a century. That is true, and this time the Fed chair will be a Democrat. But the question is, what kind of Democrat?

Larry Summers has been the kind of Democrat that helped move the party away from its core values and proud tradition of focusing on the needs of ordinary Americans. He is one of the key figures in the kind of Clintonian, “Third Way” economic model in which deregulation, regressive taxes, financialization and austerity hold sway.  He is the sort of turn-coat Democrat who has jumped in bed with Wall Street and turned working class Americans away from the party they used to vote for (see: what’s happened in North Carolina). He is an elitist , completely out of touch with regular people, and obsessed with enhancing his personal wealth.