Dear UCubed Leader:
Earlier this week, Larry Summers withdrew his name as a possible replacement for Ben Bernanke, the Chairman of the Federal Reserve. That move was due in large part to opposition from U.S. Senator Sherrod Brown (D-OH).
And Sherrod deserves our deepest gratitude for his leadership on this issue.
Policy changes by the Federal Reserve take years to gain traction. Its decisions to raise or lower interest rates – or expand or taper economic stimulus measures – are seldom felt immediately by the jobless or even working and middle-class Americans.
The basis pointers on Wall Street, however, react to every whiff of a new policy. They price in the changes and move on. But the builders working on Main Street won’t see their local economies grow or contract until long after the new policy is put in place. That lag time leaves the Federal Reserve almost entirely unaccountable for its actions.
And that lack of accountability would have disastrous consequences had Summers been nominated and confirmed as Chairman of the Federal Reserve.
As Secretary of the Treasury, as President of Harvard and as Chairman of the National Economic Council in the White House, Summers failed grievously whenever he lacked strong public oversight and strict accountability. His Mensa-driven mentality prevented him from admitting that he could be dead wrong. More often than not, he was. But he could wrap each fallacy in the tissue paper of sophistry to appeal to his base – the basis pointers that paid him millions when he was not serving in government.
Unfortunately, from opposing regulations on the derivatives that ultimately triggered the Great Recession to touting the “green shoots” of a still unraveling economy, Larry Summers has been the architect of America’s jobs crisis. To reward him for such dismal failures in judgment by handing him the power to control interest rates and our money supply would have been nothing less than a travesty.
Fortunately, Sherrod Brown with help from his fellow Democratic Senators on the Banking Committee forced Summers to withdraw his name from consideration. Now, at least, the Federal Reserve and its next Chairwoman (hopefully) will have a chance to pursue its twin obligations: low inflation and full employment.
Thank you, Sherrod. Thank you!
In Unity — Strength,
P.S. Full Disclosure: Sherrod and I shared a house in Columbus when he was in the Ohio General Assembly and I was in law school. Our paths seldom crossed in the intervening four decades.