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Resistance by Eliz Warren and Others Knocks Summers Out—Now It's Yellen's Turn

Obama can now make history by nominating the first woman to lead the Federal Reserve.
 
 
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Larry Summers in Beijing on September 6, 2010. Summers has withdrawn from the race to succeed Ben Bernanke at the Federal Reserve.

 
 
 
 

Something to cheer about, people! If you've been concerned about the power of big banks, the need for financial reform and the blight of crony capitalism, you can breathe a sigh of relief: Larry Summers will not be your next Fed chair. The man who helped bring you the last financial crisis will not get his hands on one of the country's two most powerful economic levers.

On Sunday, the former White House economic adviser and Treasury secretary officially withdrew his name as a candidate, according to the Washington Post.

For weeks, despite Obama's apparent enthusiasm for Summers, progressives have been actively voicing their strong objections for reasons ranging from his preference for Wall Street over Main Street to his blatant sexism (for the full list, see " 7 Reasons to Fight Obama on Picking Out-of-Touch Crony Capitalist Larry Summers as Fed Chair"). Most recently, his troubling conflict of interest problem has been highlighted with particular attention to his lucrative consulting gig with megabank Citigroup. In the Senate, Elizabeth Warren (D-Mass) signaled opposition to Summers, and did senators Sherrod Brown (D-Ohio) and Jeff Merkely (D-Ore). When Sen. Jon Tester (D-Mont.), considered a moderate, joined the group unfavorable to Summers, things began to look very shaky for him and the press began to predict an ugly confirmation battle.

In a letter to the President, Summers explained his reasons for stepping aside.

“It has been a privilege to work with you since the beginning of your Administration as you led the nation through a severe recession into a sustained economic recovery,” he wrote. “This is a complex moment in our national life. I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration, or ultimately, the interests of the nation’s ongoing economic recovery.

Senator Warren deserves full props for not backing down under White House pressure. She had good reason not to green-light Summers: Not only does he represent a bank-centic worldview at odd with her own, he actively lobbied to prevent Warren from heading the Consumer Financial Protection Bureau, her brainchild.

President Obama now has the opportunity to make history by nominating Janet Yellen as the first-ever female head of the Federal Reserve. She has always been the most qualified person for the job, known for her attention to the unemployment crisis, her cool head, her collaborative talent, and her foresight on the economy. Unlike Summers, Janet Yellen was not a cheerleader for the deregulation that helped cause the 2007-'08 financial crisis.

Earlier this summer, about a third of Senate Democrats signed a letter to Obama endorsing Janet Yellen for Fed chair over Summers. In recent days, Nobel laureaute Joseph Stiglitz and nearly 500 other economists wrote a letter to President Obama laying out their reasons for supporting Yellen.

In addition to Yellen, the White House has also mentioned the possibility of Donald Kohn, former vice chairman of the U.S. Federal Reserve . Progressives have vowed to keep up the pressures for a Yellen appointment.

Lynn Parramore is an AlterNet senior editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of "Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture." She received her Ph.D. in English and cultural theory from NYU. She is the director of AlterNet's New Economic Dialogue Project. Follow her on Twitter @LynnParramore.