Lawrence H. Summers may not be a lobbyist, but he is generating plenty of business on K Street.
His bid to take over the chairman’s seat at the Federal Reserve has created a backlash downtown among an unlikely collection of stakeholders. Religious, conservative, feminist, public interest and progressive advocates have jumped into the debate — many for the first time ever. The battle over the next nominee to chair the Fed is already unprecedented, and President Barack Obama hasn’t yet said who will get his nod.
Many on the left prefer the Fed’s vice chairman, Janet Yellen, who would be the first woman to run the central bank in its 100-year history. Those on the right are unlikely to applaud anyone on Obama’s short list.
Wall Street’s representatives, too, are trading in the latest intelligence over the nomination fight, and some of them are quietly making their own pitches to clients and Hill contacts about whether Summers should be the nominee. Those who have worked with Summers over the years expect he would maintain the accessibility to the business community he cultivated as chairman of Obama’s National Economic Council.
Perhaps that’s why, despite all the angst Summers has roused among a wide array of advocacy groups and a small but vocal club of liberal members of Congress, such as Sen. Sherrod Brown, D-Ohio, he has some high-level allies among industry lobbyists. But even they acknowledge there’s a Summers problem.
“I think I’d rather have Summers, but I can’t stand him,” said one top financial industry source. “I don’t like his style, his philosophy. But I think he would make the tough decisions that need to be made.”
Summers is no K Street insider. Wall Street CEOs, academics and Obama administration insiders comprise most of his inner circle. But the former Treasury secretary has ties downtown.
Marne Levine, who worked with him at Harvard and in the Obama and Clinton administrations, now serves as Facebook’s vice president for global public policy. Michael Levy, policy director at Brownstein Hyatt Farber Schreck, served with Summers at Treasury during the Clinton administration.
Like any lobbyist, Summers carries the taint of the revolving door. He served in the Clinton and Obama administrations and as president of Harvard, but he has also collected paychecks from Citigroup and the hedge fund D.E. Shaw.
“Larry Summers’ deep and current and ongoing connections with Wall Street frankly should be a disqualification for a chairman of the Federal Reserve board,” said Dennis Kelleher, a Democrat who runs the nonprofit Better Markets, which lobbies for firm regulations on the financial sector.
Especially now, Kelleher and his allies argue, with so much at stake. Since the economic collapse, the Fed under Chairman Ben S. Bernanke has embarked on a never-before-attempted stimulus program. In an effort to revive the struggling economy, the Fed has kept interest rates at historic lows and has purchased some $3 trillion worth of Treasury and mortgage-backed securities.
Perhaps as early as this month, the Fed may begin to taper its purchases, which currently total $85 billion a month. In addition, the Dodd-Frank financial reform law imbued the Fed with far greater regulatory power over banks. Summers’ critics fret that he could roll over on his duty as Wall Street’s watch dog.
“The job of the next fed chairman is almost unimaginably difficult,” Kelleher said. “You can’t overstate the importance or the difficulty.”
That’s what has motivated the American Principles Project, a conservative values organization, to mount an effort against Summers and the others Obama has said he may pick.
The group’s economics director, Rich Danker, said the APP is preparing a website in opposition to a nominee. “We want to see as many groups as possible on the right and the left,” he said.
If Summers is the nominee, that left-right alliance will blossom. Public Citizen, a liberal pro-regulation group, has already been reaching out to tea party members, particularly those in the Senate, to foment opposition to Summers' confirmation, should he get the nomination. Danker said his side shares with liberals the complaint that Summers is too cozy with corporate interests. “We will be making parallel arguments or maybe even together,” he said.
Danker said the APP soon will shoot ads to run on its website and on YouTube. It will begin with a modest financial commitment — $25,000 — with a goal of raising more money to buy TV spots.
Eric LeCompte, director of Jubilee USA Network, a religious organization, has not before waded into the Fed chairman decision.
“We are trying to frame the moral principles that are important to the debate,” LeCompte said, noting that Jubilee has not taken a position on specific nominees. But in a letter to Obama, the group made clear that it’s appealing to an even higher power: “As you consider the candidates to serve as the Chair of the U.S. Federal Reserve System, know that you are in our prayers.”
Correction: 3:56 p.m.
An earlier version of the post misstated the amount that the Fed is buying per month in securities.