Summers pulls out of US Fed race

Former US Treasury Secretary Larry Summers has withdrawn his candidacy to succeed Ben Bernanke as head of the US central bank, the Federal Reserve.

In a letter to President Barack Obama, quoted by the Wall Street Journal, Mr Summers said any confirmation process for him was likely to be “acrimonious”.

Mr Summers was one of the front-runners for the post, along with current Fed vice-chairman Janet Yellen.

The dollar fell in Asian currency trading as markets reacted to the news.

Mr Obama said he had accepted Mr Summers’ decision.

The president said in a statement: “Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today.”

Mr Obama added that he would always be grateful to Mr Summers for his “tireless work and service on behalf of his country” and looked forward to continuing to seek his guidance and counsel in the future.

The dollar fell 0.4% against the pound and the yen and 0.5% against the euro, with markets drawing the conclusion that Mr Bernanke’s eventual successor might be slower to end the Fed’s programme of monetary stimulus than Mr Summers would have been.

Senate objections

“I have reluctantly concluded that 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 economic recovery,” Mr Summers wrote in his letter to the president.

This was seen as a reference to the opposition that his candidacy faced from some influential members of Mr Obama’s Democratic Party, including some members of the Senate Banking Committee.

Mr Summers was Treasury secretary during the Clinton administration from 1999 to 2001 after spending four years as deputy. Before that, he was chief economist of the World Bank from 1991 to 1993.

He served President Obama as director of the National Economic Council in 2009 and 2010.

Mr Bernanke’s term as Fed chief is due to expire at the end of January next year. If Ms Yellen is chosen to succeed him, she will be the first woman to hold the post.