Thursday, July 25, 2013

A Recurring Summer(s) Nightmare

Get me an Ambien, or whatever is the favorite of people having nightmares. I am having flashbacks and can't sleep. In a piece tactfully called "Larry Summers is an Unrepentant Bully," Huffington Post Business Editor Peter Goodman writes,

In the fall of 2008 -- just after many of the nation's largest financial institutions teetered toward collapse, prompting the government to unleash a taxpayer-financed rescue -- I called Larry Summers at his Harvard office to ask him whether he had any regrets. 
Specifically, I wanted to know how Summers had come to view his actions as Treasury secretary in the Clinton administration, where he had joined then-Federal Reserve Chairman Alan Greenspan to dismantle the government's authority to regulate trading in derivatives -- the very financial instruments then playing a central role in the crisis. 
Summers immediately took charge, barking that we were off the record -- a directive that I rejected, prompting him to raise his voice. He accused me of conducting a "jihad" aimed at unfairly implicating him as a cause of the financial crisis. 
I promised to call him again before my piece ran, giving him time to reflect. I left messages but didn't hear back, so I left one more, reminding him of my previous calls. When he finally called, his legendary condescension was fully engaged. 
"The probability that you left me a message that I did not receive is approximately zero," he said. When it turned out that his secretary had been mixed up about the date of my messages (or maybe it was Larry who was mixed up?), he turned on her, criticizing her sharply with me on the line. 
There are worse things in life than terrible phone manners, imperiousness and excessive confidence, but …

That sounds just like the guy we remember fondly as president of Harvard.

And then there is another piece, this one in the New Republic by Noam Scheiber, entitled "The New Larry Summers Sure Looks Like the Old Larry Summers." This is a commentary on an Ezra Klein piece in the Washington Post which reports that the White House thinks "a lot of the opposition to Summers is based on bad or outdated information."

Now where have I heard that before? Oh, right. That is what Bob Rubin told the Harvard presidential search committee back in 2000 or early 2001. As Richard Bradley reports in Harvard Rules (pp. 78-79),
Rubin called three members of the search committee who had particular doubts …. It was true, Rubin admitted, that Summers had once had what Rubin would call "a rough edges" issue. But he'd mellowed, Rubin insisted. This was a man who'd successfully negotiated with congressional leaders and foreign treasurers, who'd survived and prospered for a decade in a viciously partisan Washington environment. His temper existed more in legend than in reality. Rubin's seal of approval worked. "Rubin made us confident that we weren't getting a bull," one member of the committee later said. 
I wonder, is it Rubin again who is telling Obama, "Don't worry, he's changed"? Scheiber goes on.

As for the other key criticism of Summers—that he doesn’t play well with others, something that’s central to making the Fed work—the White House suggestion that it, too, is “outdated” strikes me as delusional or willfully ignorant. … Summers clashed constantly with fellow administration officials, most famously budget director Peter Orszag and White House economist Christie Romer. Often it was about matters of national urgency, and so a little heat could be forgiven. But all too frequently it arose from pure pettiness and immaturity. One example:  
About six months into the administration, [Summers] and Orszag were scheduled to join the vice president at a White House event. When Orszag arrived, a body man seated him next to Biden, only to return a few minutes later and ask him to move. Summers had insisted on taking the seat even though it was assigned to Orszag. “I’m really sorry. We had a seating chart. But Larry walked in and saw that you were sitting next to the vice president,” the aide said. [Orszag agreed to move; a third administration official who was present confirmed this account.]  
It wasn’t just running antagonists like Orszag and Romer that felt the impact of Summers’ rough edges. The origins of Rahm Emanuel’s ill-fated attempt to procure a personal car for Summers date back to a day in the fall of 2009, when Summers groused to the then-chief of staff: “Life sucks around here. I waited thirty minutes outside the Capitol because you fuckers can’t get your motor pool to work right.”  
And then there were the senior Treasury officials whom Summers managed to alienate, like Lee Sachs (Geithner’s top financial consigliere during the first two years of the administration) and Matthew Kabaker, widely regarded as one of Treasury’s brightest stars at the time. Summers seemed to delight in pummeling these two during their hours-long debates over how to respond to the financial crisis. Now, as I say, these were consequential debates, so you’d expect some flashes of emotion. But Summers favored a distinctly unbecoming approach—including a need to taunt his sparring partners as they went back and forth. “Lee, you’re losing this argument!” Summers would thunder. “You’re getting crushed!” 
… Fed chairman simply isn’t the right job for someone with his shortcomings. … In the end, I don’t think Obama is doing Summers any favors by pushing him for it. The longer the White House holds him up as the top candidate, the more damaging it will be to Summers himself, because the list of drawbacks really is quite lengthy.
I remember, when the Harvard faculty spoke of Summers' failings of common civility, they were repeatedly ridiculed in the press as pantywaists, frail things who bruise like the princess with the pea. So what if he is a bull in a china shop; who wants to live in a china shop?

But it was all true then at Harvard just as it will be true again in the Fed: You have to be able to work with people to get them to work for you. The humanists in particular came in for dismissive treatment; they just weren't used to the no-holds-barred, rough-and-tumble style of the economists. But that was never it. Economists have manners too. At a 2006 faculty meeting reported in the Boston Globe,
Caroline Hoxby, one of two tenured women in economics, the department where Summers teaches, spoke of the ties between scholars, their mentors, and students as a "a great shimmering web" when a university is functioning at its best. 
"Every time, Mr. President, you show a lack of respect for a faculty member's intellectual expertise, you break ties in our web. Every time you humiliate or silence a faculty member, you break ties in our web," Hoxby said. "When you engage in speech that harms the university's ability to foster scholarship and that is not thoughtful, not deliberate, and not grounded in deep knowledge, you break ties by the hundreds."
Right after that meeting Summers experienced an epiphany. "I am determined to set a different tone. I pledge to you that I will seek to listen more, and more carefully, and to temper my words and actions in ways that convey respect and help us work together more harmoniously."

And heck, after that he hardly had another problem at Harvard.

Summers has not changed. He can persuasively pretend to change, but he can't change. Mr. President, please don't. Listen to what people are trying to tell you. For the good of the country, don't get taken in by any talk about how Larry Summers is a changed man.

Other pieces worth reading:
Wait, Larry Summers is now the Favorite for the Fed? Can We At Least Talk It Over First? (Scheiber)
Fears Rise that Larry Summers Likely to be Named Fed Chairman IRyan Grim)
Larry Summers Nomination Would Bypass "Steady" and "Right" Janet Yellen (Zach Carter and Ryan Grim; don't know if that piece is right about Yellen but it is right about Summers)
The White House Wants Larry Summers for the Fed. But Will They Actually Choose Him? (Ezra Klein and Evan Soltas: "All else being equal, President Obama would like to choose Larry Summers; Right now, the White House is trying to figure out how equal all else is")


  1. Makes ya wonder if those crazies who claim Obama is trying to destroy the U.S. really aren't. Well, yes. They are. But even a broken clock gets the time right twice a day.

  2. Given former US Sen. Ted Kaufman's conclusion that the Dodd-Frank Act has failed to reduce "too big to fail" systemic risk of the big banks (see, the need is greater for the Fed to keep a watchful eye on the megabanks, which are still engaging in high-risk trades. (on this point, see Paul Volcker would not pull any punches. He took care of inflation in the early 1980s and pushed the "Volcker Rule" even as lawmakers and regulators have weakened it in line with the interests of Wall Street. In contrast, Larry Summers pushed for the repeal of the law that had kept commercial and investment banking separate (the Glass-Steagall Act) and lobbied Congress to keep financial derivatives unregulated in the late 1990s. (See Is there a learning curve here or is history bound to repeat itself?

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  4. Funny, I had an experience with Summers hugely similar to the one Peter Goodman describes when I was reporting an article for the Boston Globe magazine about Summers' return to campus and his relationship with Drew Faust. After repeated attempts to get Summers on the phone, he and I finally connected (I think he called me), and Summers accused me of not having called him; when I protested otherwise, in so many words he called me a liar.

    I responded that I would be happy to send him my phone records, and he promptly shut up.

    1. Weird. Like some male dominance ritual, a ploy for putting your adversary on the defensive??!