GOP enjoying Fed food fight among Dems: Politico

posted at 12:41 pm on September 13, 2013 by Ed Morrissey

Most of the time, the media focuses on Republican disunity, so consider this a Friday treat.  With Ben Bernanke’s tenure as Federal Reserve chair just about to end, Barack Obama has to decide who to appoint to run the nation’s monetary policy.  Senate Democrats have split on the two leading candidates, and the infighting gives Senate Republicans a rare chance to act as kingmaker … or queenmaker:

Republicans won’t outright admit they are enjoying the Democratic infighting over the next Federal Reserve chairman, but they don’t mind sitting back and watching it unfold.

GOP senators know their leverage increases with each Democratic senator that opposes Larry Summers — President Barack Obama’s former economic adviser and a top candidate to replace Fed Chairman Ben Bernanke when his term ends in January. Several Democratic senators as well as progressive and women’s groups are pushing the president to pass on Summers and nominate current Fed Vice Chair Janet Yellen, another contender for the job. …

”There’s a little bit of spectator sport in this current circumstance,” Moran said. “It’s given me as a Republican the opportunity to take a step-back without the necessity of trying to form an opinion about any of the potential candidates.”

Crapo, Moran and the other Banking Committee Republicans know better than to tip their hand now on whether they would vote for Summers or Yellen.

“Why should they?” said one former Obama aide who works on economic issues. “One of the first rules of politics is when the opposition is harming themselves — step out of the way. By being divided, Banking Committee Democrats are yielding influence to Republicans who are now in the position to cast deciding votes.”

This is one of those wonky disputes that rarely generates this much passion or attention.  Both candidates would likely pursue the kind of activist monetary policies that Obama wants as a way to bypass Congress, with Yellen perhaps more activist than Summers. It’s complicated by the dearth of other women among Obama’s second-term appointments, especially to Cabinet-level positions, which generated sharp criticism after the war-on-women theme of Obama’s re-election campaign. Summers’ track record with feminists is a complicating factor, too, after suggesting in 2005 that innate gender differences might account for disparity in outcomes for women in science and mathematics fields.

Summers has been a longtime adviser to Obama and knows him best, but Yellen is getting support from a larger swath of the economist community:

More than 300 economists have signed an open letter to President Obama urging him to nominate Janet L. Yellen to be the next head of the Federal Reserve, citing her “consistently good judgment” and her commitment to reducing unemployment.

“In our opinion, she is the best possible leader for the Federal Reserve Board at this critical time in our nation’s history,” the letter said.

“Her knowledge of how the Fed sets policy, her understanding of the relationship between monetary policy and economic growth, and her ability to see and propose solutions to emerging economic problems is second to none,” it said.

Picking Summers over Yellen after the controversy, and after the feedback from the economic community, will create a political headache that the White House hardly needs at this point.  The same is true for Senate Democrats, some of whom have to run in the midterms.  For all these reasons, the Fed appointment has become a hot potato — and the Obama’s procrastination on a decision (which looks like a pattern these days) has made it worse.

Republicans would probably like to avoid endorsing either one for as long as possible for those very reasons, and probably wouldn’t have minded staying out of the fight entirely.  However, now that Obama’s dithering and the split on the other side of the aisle has handed them an opportunity to gain leverage, it will be interesting to see how they use it.  What will Obama trade to get support for his eventual choice?  That may be even more of a critical question if he picks Summers, as was the rumor this morning before the White House quashed it.

The newly-christened vacillation model of leadership certainly has worked out well for Obama, huh?


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Vote “Present” They can always saying they were following Obama’s legislative career example.

philw1776 on September 13, 2013 at 12:48 PM

One of the first rules of politics is when the opposition is harming themselves — step out of the way

See also, Syria.

rbj on September 13, 2013 at 12:49 PM

GOP will fluke things up, royally, on the budget and related…3, 2, 1.

Schadenfreude on September 13, 2013 at 12:49 PM

Whoever succeeds Bernanke, he/she will be a disaster. Obamacare has to be fully funded and inflation will probably be the means they choose to fully fund it. That means even higher prices for commodities. It also means health-care costs more and is worth less.

rickv404 on September 13, 2013 at 12:49 PM

Politico is a joke. This is kabuki theater being reported as a breathless breaking news spot.

Reminds me of the wisdom hidden in Zappa lyrics and Zappa stage presence. People have no idea that he was a crazed committed right winger. Yes, there are actually youtube clips showing him the way he really was.

platypus on September 13, 2013 at 12:51 PM

I don’t want Dove Yellen – America’s own Christine Lagarde, but it is instructive to remember these words about Summers – and they come from the most unlikely of sources:

‘On derivatives, yeah I think [Summers, Rubin, and Greenspan] were wrong and I think I was wrong to take [their advice] because the argument on derivatives was that these things are expensive and sophisticated and only a handful of investors will buy them and they don’t need any extra protection, and any extra transparency. The money they’re putting up guarantees them transparency.’

- William Jefferson Clinton, 2010

It wasn’t as if he was warned. Oh wait…

Clinton failed to heed the warnings of his CFTC head, Brooksley Born, allowed the derivatives market to grow to 1.4 quadrillion dollars and largely unregulated. Ms Born begged Clinton. Messrs. Summers, Rubin, and Greenspan disregarded the warnings and convinced Mr Clinton to ignore her because they wanted to help their buddies on Wall Street. Further, they did so in a most misogynistic manner.

‘If any three people are most responsible for the failure of financial regulation, they are Greenspan, Larry Summers, and my former colleague, Bob Rubin. In 1999 they advised Congress to repeal the Glass-Steagall Act, which since 1933 had separated commercial from investment banking. By 1999, Wall Street was salivating over such a repeal because it wanted to create financial supermarkets that could use commercial deposits to place bets in the financial casino. That would yield the Street trillions.’

- Robert Reich

‘Greenspan, Summers and Rubin all acted — or failed to act — to enable Wall Street’s quest for higher profits via the opaque OTC market structure model and did so at the expense of the public interest. Instead of a truly free and transparent securitisation market where occasionally a player does fail, today’s OTC jungle ensures the destruction of a significant portion of capital deployed by dealers and investors both?’

- New York Times, 28 April 2009

Resist We Much on September 13, 2013 at 12:52 PM

Politico: GOP enjoying Fed food fight among Dems

Yeah, so?

Kingfisher on September 13, 2013 at 12:54 PM

I don’t want Dove Yellen – America’s own Christine Lagarde, but it is instructive to remember these words about Summers – and they come from the most unlikely of sources:

‘On derivatives, yeah I think [Summers, Rubin, and Greenspan] were wrong and I think I was wrong to take [their advice] because the argument on derivatives was that these things are expensive and sophisticated and only a handful of investors will buy them and they don’t need any extra protection, and any extra transparency. The money they’re putting up guarantees them transparency.’

- William Jefferson Clinton, 2010

It wasn’t as if he was warned. Oh wait…

Clinton failed to heed the warnings of his CFTC head, Brooksley Born, allowed the derivatives market to grow to 1.4 quadrillion dollars and largely unregulated. Ms Born begged Clinton. Messrs. Summers, Rubin, and Greenspan disregarded the warnings and convinced Mr Clinton to ignore her because they wanted to help their buddies on Wall Street. Further, they did so in a most misogynistic manner.

‘If any three people are most responsible for the failure of financial regulation, they are Greenspan, Larry Summers, and my former colleague, Bob Rubin. In 1999 they advised Congress to repeal the Glass-Steagall Act, which since 1933 had separated commercial from investment banking. By 1999, Wall Street was salivating over such a repeal because it wanted to create financial supermarkets that could use commercial deposits to place bets in the financial casino. That would yield the Street trillions.’

- Robert Reich

‘Greenspan, Summers and Rubin all acted — or failed to act — to enable Wall Street’s quest for higher profits via the opaque OTC market structure model and did so at the expense of the public interest. Instead of a truly free and transparent securitisation market where occasionally a player does fail, today’s OTC jungle ensures the destruction of a significant portion of capital deployed by dealers and investors both?’

- New York Times, 28 April 2009

Resist We Much on September 13, 2013 at 12:54 PM

I don’t want Dove Yellen – America’s own Christine Lagarde, but it is instructive to remember these words about Summers – and they come from the most unlikely of sources:

‘Yeah I think [Summers, Rubin, and Greenspan] were wrong and I think I was wrong to take [their advice] because the argument on derivatives was that these things are expensive and sophisticated and only a handful of investors will buy them and they don’t need any extra protection, and any extra transparency. The money they’re putting up guarantees them transparency.’

- William Jefferson Clinton, 2010

It wasn’t as if he was warned. Oh wait…

Clinton failed to heed the warnings of his CFTC head, Brooksley Born, allowed the derivatives market to grow to $1.4 quadrillion and largely unregulated. Ms Born begged Clinton. Messrs. Summers, Rubin, and Greenspan disregarded the warnings and convinced Clinton to ignore her because they wanted to help their buddies on Wall Street. Further, they did so in a most misogynistic manner.

Resist We Much on September 13, 2013 at 12:57 PM

Now, let’s see if the other two get through…

‘If any three people are most responsible for the failure of financial regulation, they are Greenspan, Larry Summers, and my former colleague, Bob Rubin. In 1999 they advised Congress to repeal the Glass-Steagall Act, which since 1933 had separated commercial from investment banking. By 1999, Wall Street was salivating over such a repeal because it wanted to create financial supermarkets that could use commercial deposits to place bets in the financial casino. That would yield the Street trillions.’

- Robert R3ich

‘Greenspan, Summers and Rubin all acted — or failed to act — to enable Wall Street’s quest for higher profits via the opaque OTC market structure model and did so at the expense of the public interest. Instead of a truly free and transparent securitisation market where occasionally a player does fail, today’s OTC jungle ensures the destruction of a significant portion of capital deployed by dealers and investors both.’

- New York Times, 28 April 2009

Resist We Much on September 13, 2013 at 12:58 PM

Now, let’s see if I can get the others through…

‘Greenspan, Summers and Rubin all acted — or failed to act — to enable Wall Street’s quest for higher profits via the opaque OTC market structure model and did so at the expense of the public interest. Instead of a truly free and transparent securitisation market where occasionally a player does fail, today’s OTC jungle ensures the destruction of a significant portion of capital deployed by dealers and investors both.’

- New York Times, 28 April 2009

Resist We Much on September 13, 2013 at 12:59 PM

‘If any three people are most responsible for the failure of financial regulation, they are Greenspan, Larry Summers, and my former colleague, Bob Rubin. In 1999 they advised Congress to repeal the Gl@ss-Steagall Act, which since 1933 had separated commercial from investment banking. By 1999, Wall Street was salivating over such a repeal because it wanted to create financial supermarkets that could use commercial deposits to place bets in the financial casino. That would yield the Street trillions.’

- Robert R3ich

Resist We Much on September 13, 2013 at 12:59 PM

‘If any three people are most responsible for the failure of financial regulation, they are Greenspan, Larry Summers, and my former colleague, Bob Rubin.’

- Robert Reich

Resist We Much on September 13, 2013 at 1:00 PM

Sorry.

Resist We Much on September 13, 2013 at 1:00 PM

More than 300 economists have signed an open letter to President Obama

Isn’t the correct spelling– Communists?

hillsoftx on September 13, 2013 at 1:01 PM

Of course the GOP enjoys the fight. All they care about is their political prospects. They don’t care one bit about the direction of the country or following through on any of their promises (including their party platform).

besser tot als rot on September 13, 2013 at 1:03 PM

So, which one of these possibilities is the bad one? And, which is the worse one?

besser tot als rot on September 13, 2013 at 1:05 PM

If 300 economists openly support Yellen, she must be awful, right?

besser tot als rot on September 13, 2013 at 1:06 PM

More than 300 economists have signed an open letter to President Obama

Flashback: 200 Economists Against Obama’s Supercalifragilisticexpialidocious Stimulus (it later grew to more than 300)

Resist We Much on September 13, 2013 at 1:06 PM

Behold the next Barack Obama.

http://www.youtube.com/watch?v=GgvXniTz7D8

30 seconds of video that will tell you where we’re headed. Listen to all the cliches devoid of specifics about how the city will collapse into bankruptcy. Joining Mexifornia in the economic abyss.

http://www.latimes.com/business/la-fi-minimum-wage-20130913,0,1527959.story

PappyD61 on September 13, 2013 at 1:15 PM

Socialist A or Socialist B… hmmm… I don’t see a winer here except the state.

If this is the only separator:

Yellen perhaps more activist than Summers

Summers has the edge.

mankai on September 13, 2013 at 1:16 PM

For all these reasons, the Fed appointment has become a hot potato — and the Obama’s procrastination on a decision (which looks like a pattern these days) has made it worse.

Business as usual. When faced with a difficult decision. DON’T!

GarandFan on September 13, 2013 at 1:31 PM

Obama even leads from behind on political appointees. He appointed Kerry and Susan Rice to positions in order to give the middle finger to his opposition and it came back to bite him. Guess he skeered.

neyney on September 13, 2013 at 2:11 PM

‘If any three people are most responsible for the failure of financial regulation, they are Greenspan, Larry Summers, and my former colleague, Bob Rubin.’

- Robert Reich
Resist We Much on September 13, 2013 at 1:00 PM

B.S. The #1 culprit was the President of the NY Federal Reserve….some dude named Tim Geitner…some say he was a tax cheat, to boot.

Deafdog on September 13, 2013 at 2:25 PM

You really want to make Boner cry today.

antisocial on September 13, 2013 at 2:47 PM

Wow…. choosing between sh!t and a turd…..

I think I’ll just wait until 2016, and see what the cat drags in….

momodoom on September 13, 2013 at 7:39 PM

This pretty much sums up the choice…

http://m.youtube.com/watch?v=UthMHjoNyjA

mankai on September 13, 2013 at 8:37 PM