The withdrawal of Lawrence Summers as a candidate for Federal Reserve chairman doesn't change President Barack Obama's timetable for selecting a nominee to replace Ben S. Bernanke, his spokesman said.
Mr. Obama has said “he expects to have an announcement in the fall,” White House press secretary Jay Carney said Monday. “We are still in the summer.”
On Sunday, Mr. Summers withdrew from consideration for the top Fed job, sparing the president a potential fight within his own party after an unprecedented campaign by several Democratic senators to block a nomination before it was even made. That threatened to leave Mr. Obama needing help from Republican senators at a time when he's gearing up for battles over federal spending, the debt ceiling and dealing with Syria.
“The prospect of facing a fight over its Federal Reserve nominee was simply one battle too many for the White House,” said Isaac Boltansky, an analyst with Compass Point Research & Trading LLC.
With Mr. Summers out of the running, Fed Vice Chairman Janet Yellen, 67, moves up on the list of possible choices but she isn't “a lock to get the nod” from Mr. Obama, he said.
The president said last month he was looking at a “range of outstanding candidates.” He previously mentioned Ms. Yellen and Donald Kohn, 70, a onetime Fed vice chairman. Former Treasury Secretary Timothy Geithner, another potential candidate, isn't interested in the job, according to several people, who asked for anonymity to talk about internal debates.
Summers had become a lightening rod for some of Obama's allies in Congress and advocacy groups. Democratic lawmakers, including Senators Jeff Merkley of Oregon and Sherrod Brown of Ohio, said they opposed Summers on the grounds that he was too lax on financial regulation.
Summers, a former Treasury secretary and top economic adviser, acknowledged the opposition in a letter yesterday to the president.
“Any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the administration, or ultimately, the interests of the nation's ongoing recovery,” Summers, 58, wrote.
The people familiar with the process said Summers had been Obama's top choice, even though White House officials late last week insisted the president had yet to make a decision.
The president's inner circle was divided over whether Obama should expend capital on a Summers confirmation fight. Unlike the drama playing out in public, it wasn't a split along gender lines, according to the people, who asked for anonymity to talk about internal deliberations.
The split came down to those who figured that the battle would be too costly, including Chief of Staff Denis McDonough and senior adviser Valerie Jarrett, the people said.
The presidential advisers backing Summers mostly were those who worked alongside him during the peak of the 2009 financial crisis and felt they owed it to their former colleague to fight for him. They included the core of Obama's economic team as well as most of the president's female senior advisers, including deputy chief of staff Alyssa Mastromonaco and White House Counsel Kathryn Ruemmler, according to the people.
The decision on the next Fed chairman -- Bernanke has indicated he's not interested in serving a third term -- is coming as investors are debating the speed at which the Fed will taper its $85 billion in monthly bond purchases. Traders had speculated that, given Summers's past questioning of the effectiveness of quantitative easing, he may have pulled back the stimulus faster than other candidates such as Yellen.