SalemNews.com, Salem, MA

August 9, 2013

Column: Smoke and mirrors

Joseph F. Doyle
The Salem News

---- — It’s been announced by Ben Bernanke that he will not be seeking to be reappointed as chairman of the Federal Reserve when his term expires in January. Two top candidates have emerged for that position.

Janet Yellen, Yale-educated, is currently vice-chair of the Federal Board of Governors (since 2010) and Bernanke’s number two. Previously, she headed San Francisco’s Federal Reserve Bank for six years, where in 2007 she was one of the few bank regulators to warn the industry and the public about the questionable efficacy of subprime mortgages. She makes the Good Ol’ Boy network on Wall Street nervous because she might not bail them out again. In regards to regulations, she takes the populist view that they are necessary rather than something to be done away with, which also alienates the Wall Street types. She doesn’t play golf or socialize with them at their soirees. She is what, in the financial arena, you would call boring but effective.

Larry Summers, on the other hand, was born to a pair of award-winning economists. He is a former president of Harvard, a former Treasury secretary and chief economic adviser for Obama, during the latter’s first term. He lost his presidency at Harvard with a disparaging remark suggesting that women are not the intellectual equals of men. During his stint as secretary of the Treasury, he worked with Alan Greenspan, Robert Reuben and Sen. Phil Graham to repeal the financial-backing regulations known as Glass-Steagall, the repeal of which, more than anything else, has created the financial upheaval of the Western economies.

When President Obama was first elected, before he took office, he said, “Help is coming.” Those who were responsible for the financial disaster would be held accountable for their actions. Four months later, in his first official presidential press conference, he announced there would be no prosecutions, and he was going to hire the people who knew “where the bodies were buried.” He had already hired Larry Summers and Tim Geitner, who, in my opinion, can both best be described as shills for some questionable financial machinations on Wall Street, and who, based upon performance, are both ethically and morally challenged. Joseph Epstein of Newsweek profiled Summers in that magazine as someone who comes off, economistically, as super-confident in the grand old style, but is in actuality an offensively loud, bombastic buffoon who is wrong 80 percent of the time. His greatest claim to fame is his responsibility for undoing the financial regulations that previously protected society.

After it was obvious that Obama wasn’t going to bring any criminal prosecutions against the perps of the Great Recession, while still in Obama’s employ, Summers aggregated a total of $3.7 million from speaking engagements with Citigroup, Goldman Sachs, et al. (He is currently a consultant for Citigroup and plays golf with Obama.)

Obama has identified Yellen and Summers as the front-runners for his selection of the new Federal Reserve Chairman. Janet Yellen is eminently qualified and would be the first woman to lead the Federal Reserve. She also sends shivers down the spines of the financial elite. Summers, on the other hand, is a flunky for big-money interests, whose style has been described as “bluff precision.” We can’t afford a financial leader who has only a 20 percent success rate, whose main qualifications are his ego and his access to the financial power elite. On top of all that, he’s a sexist!

We need a 21st century solution, not a 19th century snake-oil salesman. We need somebody to work for the greater good, not just for their own good.

Janet Yellen may be only boring but effective, but based on her performance, she is the clear choice.

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Joseph F. Doyle is a freelance writer based in Salem.