Lots of reports flying around that Larry Summers is in line to be Obama’s Treasury Secretary. I think that this could be a mistake.
I have tremendous respect for Summers. He is often pilloried as a green eyeshade centrist, but in many ways he is very progressive: he fought very hard against the regressive Republican tax proposals, for example. And many of the things he is attacked for boil down to tentative musings (which is ironic because he’s very opinionated). Those who call him a sexist are really just distorting the context of his remarks.
But that in and of itself it a problem: as someone once said of Dean Acheson, Summers will be the smartest guy in any room he walks into, but not smart enough to hide it. And in the context of finance, which will require good Congressional relations (less so than foreign policy), that could be a real problem.
More important is Summers’ close relationship with (some would say protection of) Andrei Schleifer. Schleifer is another brilliant economist who seemed to think that his brilliance allowed him trade tens of millions of dollars of Russian stocks while directing the pace and direction of Russian privatization. The US government sued Schleifer and Harvard University (where Schleifer holds a professorship and which held the USAID contract under which Schleifer worked) for fraud. Harvard settled the lawsuit and paid several million dollars to the government.
And who was President of Harvard when the university decided to settle the lawsuit? Larry Summers. It is not unreasonable speculation that Harvard settled the lawsuit the way it did in order to protect the friend of the President. It’s also not unreasonable to suggest that this, not anything about public statements, was the cause of Summers’ downfall from the Harvard Presidency.
Maybe this is all unfair to Summers. But it’s the last thing in the world that a new Obama Administration wants being replayed in the news if Summers is nominated. This is especially true given that a lot of the financial crisis is perceived as being about favors being done for powerful people, and insider deals made in Washington.
It might be something else if Summers had been cleared, or if he was the only or sole candidate for the job. But he’s not. Don’t go there.