* Liberal Democrats push back, wary of Wall Street ties
* Group of Senate Democrats throws support to Yellen
* Sources see quiet proxy campaign on behalf of Summers
* Obama said to see Summers' Wall Street ties as a strength
By Pedro da Costa and Mark Felsenthal
WASHINGTON, July 25 President Barack Obama could
be months away from announcing his pick to replace Ben Bernanke
at the Federal Reserve, yet critics are already making an
unusual public effort to stop one contender in the race - former
U.S. Treasury Secretary Lawrence Summers.
The outcry has come not from Republicans, but the left wing
of the Democratic Party. Summers advised Obama, was treasury
secretary under former President Bill Clinton, led Harvard
University and was chief economist for the World Bank. He helped
tame the Asian financial crisis that threatened to sweep the
globe under Clinton.
But liberals blame him for spearheading financial
deregulation that they charge helped create the financial
crisis, and say his work at hedge fund D.E. Shaw makes him the
epitome of a revolving door between Wall Street and government.
A representative for Summers, who writes an opinion column
for Reuters, declined to comment for this article, as did the
White House and the Fed.
Some powerful Democrats, including former Treasury Secretary
and one-time Citigroup executive Robert Rubin, have been
speaking up behind the scenes for Summers, according to multiple
sources with close ties to the Fed or the White House.
If Obama tapped Summers, he would be picking him over the
Fed's current vice chair, Janet Yellen, who is seen as the other
main candidate for the job.
Both Yellen and Summers would be expected to hew fairly
close to the policy course set by Bernanke.
Supporters of Summers argue he should have an edge given his
"When there is consensus, who the Fed chair is hardly
matters, and the times when it matters are the times when you
have to think outside the box, and then his strengths shine,"
said Brad DeLong, a professor at the University of California,
Berkeley, who worked with Summers in the Clinton Treasury
According to aides, Senate Democrats who oppose him have
penned a letter urging Obama to choose Yellen, who has been a
major force in the Fed's efforts to stimulate a sluggish U.S.
recovery using unconventional monetary policies. Yellen would be
the first woman to head the central bank.
Democratic Senator Sherrod Brown of Ohio was circulating the
letter, the aides said. It was unclear how many senators had
signed it, but several Democrats have already spoken out in
favor of Yellen and against Summers.
"I am for Janet Yellen. I am taking that position,"
Democratic Senator Tom Harkin of Iowa told Reuters.
A spokeswoman for Brown did not respond to emails requesting
comment, and a Fed spokeswoman said Yellen declined to comment.
Bernanke's second four-year term at the helm of the central
bank expires on Jan. 31, 2014. While he has not discussed his
plans, it is widely expected he will step down.
Some critics of Summers wonder why Obama might turn down a
woman for a man who has been accused of sexism. As president of
Harvard, Summers sparked a firestorm by suggesting intrinsic
aptitude might explain why relatively fewer women reach top
academic positions in math and science - comments for which he
"The president's track record of appointing women is
mediocre at best," Greg Valliere, chief political strategist at
Potomac Research Group, said in a note to clients. "So there's a
brilliant female candidate to replace Ben Bernanke; she's highly
respected within the Fed - and Obama is going to appoint someone
who will never live down his comments that women lack the
qualifications for some university jobs?"
CONCERNS ON REGULATION
When he served as Treasury chief under Clinton, Summers
helped clinch the law that revoked the Depression-era
Glass-Steagall Act, which separated investment banking
activities from those of commercial, deposit-taking
That opened the gate for commercial banks to get involved in
riskier financial products, such as the credit default swaps
that were at the heart of the 2007-2009 financial crisis.
Moveon.org, a liberal group that provided major support to
both Obama presidential campaigns, is circulating a petition
entitled: "Don't let Larry Summers head the Fed," which accuses
him of laying the groundwork for the deep U.S. recession.
Senate Banking Committee member Jeff Merkley, a Democrat
from Oregon, told Reuters he would find a nomination of Summers
"Many questions need to be asked and answered related to his
philosophy of regulation and deregulation," he said.
LEANING TOWARD SUMMERS?
A person with close ties to the Obama administration said he
had reason to believe the president was closely considering
Summers, and perhaps even leaning toward him. The source said
Obama would likely view Summers' ties to Wall Street and
crisis-management experience as important attributes.
At the same time, sources familiar with thinking inside the
Fed say staff and some members of the central bank's board are
concerned Summers' often blunt manner could be a detriment in
shaping policy at the consensus-driven central bank.
Those sources requested anonymity given the sensitive nature
of the personnel discussions.
Yellen has been the runaway favorite to replace Bernanke in
media polls of financial market participants, but analysts say
Summers has the advantage of a close relationship with Obama.
He also has powerful supporters.
"His allies have been ginning up support, making it clear
that he's interested - and that's the kiss of death. If you want
a major job in this town, you have to be coy," Valliere said.
A person familiar with the nomination process said Obama had
yet to make a decision. An announcement is not expected until