(Reuters) - Lawrence Summers, a former top economic aide to President Barack Obama and a Treasury secretary under President Bill Clinton, has withdrawn from consideration to succeed Ben Bernanke as Federal Reserve chairman.
"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," Summers said in a letter to Obama.
Obama accepts Summers withdrawal
U.S. SENATOR BERNIE SANDERS, INDEPENDENT, VERMONT:
"I applaud Larry Summers for withdrawing his name from consideration. The truth is that it was unlikely he would have been confirmed by the Senate. What the American people want now is a Fed chairman prepared to stand up to the greed, recklessness and illegal behavior on Wall Street, not a Wall Street insider whose deregulation efforts helped pave the way for a horrendous financial crisis and the worst economic downturn in the country since the Great Depression. The Fed now must help develop policies which create millions of decent-paying jobs and rebuild the middle class."
SCOTT FREW, MANAGING PARTNER AND OWNER, ROCKINGHAM CAPITAL ADVISORS, HARTFORD, CONNECTICUT:
"Maybe it was a recognition that he wasn't going to get through the confirmation process, and Obama certainly doesn't seem to have a whole lot of political capital right now... If the market concludes that this means (Janet) Yellen is in, which I assume it will, there's certainly a perception that Yellen is more dovish than Summers... My first thought was that the markets will rally on this."
DAVID R KOTOK, CHAIRMAN & CHIEF INVESTMENT OFFICER, CUMBERLAND ADVISORS, SARASOTA, FLORIDA:
"I hope Obama appoints quickly now so uncertainty is removed. (Janet) Yellen seems most likely now."
JIM KOCHAN, CHIEF FIXED INCOME STRATEGIST, WELLS FARGO FUNDS MANAGEMENT LLC, MENOMONEE FALLS, WISCONSIN:
"With Summers, there has been perception that he might pursue a faster end to tapering. Easily the front runner now is Vice Chair Janet Yellen. She is a strong advocate of a stimulative policy. Then, there's always the possibility of another person such as Donald Kohn. There might be a market pop on this news but it will be a short-lived one. People could now focus on the FOMC and what Bernanke says on Wednesday. The speculation and debate on who will be the next Fed chairman has been a sideshow."
BONNIE BAHA, PORTFOLIO MANAGER, GLOBAL DEVELOPED CREDIT, DOUBLELINE CAPITAL, LOS ANGELES:
"There's no denying the fact that Larry Summers is a brilliant, albeit polarizing individual. The cacophony surrounding his potential nomination was bringing into question his potential effectiveness. It's likely that the U.S. Treasury market will breathe a big sigh of relief when trading opens tomorrow morning."
BILL GROSS, CHIEF EXECUTIVE, PIMCO, NEWPORT BEACH, CALIFORNIA (VIA TWITTER):
"Summers's exit makes Monday a huge day for curve/risk on trades. Treasury 5/30 curve may steepen by 10. Stocks should do very well."
DAN FUSS, VICE CHAIRMAN AND PORTFOLIO MANAGER, LOOMIS SAYLES, BOSTON:
"This is a good move by Larry. This is a short-term plus for the bond market."
Treasuries will rally on this news as investors saw Summers as hawkish toward quantitative easing.
LARRY JEDDELOH, FOUNDER AND CHIEF INVESTMENT OFFICER, TIS GROUP, NORTH OAKS, MINNESOTA:
The 10-year Treasury note had partially priced a Summers chairmanship.
"If it's almost anybody but Larry, I think bonds will rally."
Jeddeloh said he would not surprised to see the 10-year Treasury rally back to the 2.3 percent-2.4 percent range.
ERIC STEIN, PORTFOLIO MANAGER, EATON VANCE, BOSTON:
"I do think there will be less for investors to worry about as there will be more policy continuity at the Fed."
The knee jerk reaction will likely be good for USTs, bad for the US dollar, and good for equities, Stein said.
"I think this development is generally a good one because while Summers has a brilliant mind and is a very talented economist, I think his style would have made life at the Fed very challenging for his colleagues.
"Bernanke has made a lot of progress in depersonalizing the institution and making it less dependent on the Chairman, and under Summers this depersonalization probably would have reversed a lot."
ADAM GREEN, CO-FOUNDER, PROGRESSIVE CHANGE CAMPAIGN COMMITTEE, WASHINGTON:
"Larry Summers' past decisions to deregulate Wall Street and do the bidding of corporate America has made the lives of millions of Americans more acrimonious. He would have been an awful Fed Chair. President Obama should appoint someone to lead the Fed who has not accepted millions in payments from Wall Street, and who will prioritize an economy that works for the little guy above further enrichment for the big guy."
Dollar: Falls in response in early Asia/Pacific trading
Bonds: U.S. Treasury futures opened higher
Stocks: U.S. equity index futures opened higher
(Americas Economics and Markets Desk; +1-646 223-6300)
- Budget, Tax & Economy
- Barack Obama
- Lawrence Summers
- Ben Bernanke
- President Bill Clinton
- Janet Yellen