Larry Summer’s Citigroup past could tie his hands at the Fed
If former Treasury Secretary Larry Summers replaces Ben Bernanke at the Federal Reserve, Mother Jones points out, his consulting ties to Citigroup may constrain his efficacy as chair.
President Barack Obama’s ethics rules prohibit presidential appointees from working on matters related to former employers within two years of starting their government jobs. This rule means that Summers would have to recuse himself from a number of penalty consultations and votes on post-financial crisis rules involving Citi, the third-largest American bank. The alternative — a presidential exemption from the ethics rules — would be unprecedented for an appointee of this level. The ethics rules would not, however, keep Summers out of the action on broader financial regulations stemming from the Dodd-Frank law, including the Volcker rule, which targets risky trading by big banks like Citi.
Rumored to be Mr. Obama’s top pick, Summers is encountering plenty of opposition from liberals, who fear his coziness with Wall Street, and conservatives. Most recently, the spokesperson for Sen. John Cornyn, R-Texas, told the Huffington Post Thursday that the number two Republican in the Senate would oppose Summers’ nomination. Roll Call reported earlier this week that the liberal pro-regulation group Public Citizen has contacted Senate tea partiers for help opposing Summers.