Former US Treasury secretary Lawrence Summers had for weeks been considered the leading candidate to succeed US Federal Reserve Chairman Ben Bernanke.
A renowned economist, Summers built close ties to US President Barack Obama when he led the president’s National Economic Council in 2009 and 2010. In that role, he helped orchestrate the Obama administration’s efforts to combat the financial crisis and the “Great Recession.”
Summers withdrew from consideration for the Fed leadership on Sunday. His withdrawal followed growing resistance from critics, including some members of the US Senate committee that would need to back his nomination.
His exit could open the door for his chief rival, Fed Vice Chairwoman Janet Yellen. If chosen by Obama and confirmed by the Senate, Yellen would become the first woman to lead the US central bank.
In the past, Obama has mentioned only one other candidate as possibly being under consideration: former Fed vice chairman Donald Kohn. However, Kohn, 70, has been considered a long shot.
The administration also reached out to former US Treasury secretary Timothy Geithner early in the process. Geithner said he was not interested.
Obama is expected to announce a nominee for the Fed chairmanship as early as this month. Bernanke’s term ends on Jan. 31 next year.
Several economists said on Sunday that Summers’ exit significantly boosts the likelihood of Yellen’s nomination.
“The odds that the president will nominate Janet Yellen are now much higher,” Moody’s Analytics chief economist Mark Zandi said.
“There is a chance that there is some dark horse candidate, possibly Tim Geithner,” Zandi said.
David Jones, chief economist at DMJ Advisors and the author of several books on the Fed, said he saw Yellen’s selection as a virtual certainty.
“There is a strong view that making a woman Fed chair is an important step,” Jones said. “There is no question that her experience qualifies her for the role.”
Summers and his allies had been engaged in an unusually public contest with Yellen supporters, with each side lobbying the administration.
An openly waged succession battle is something that the Fed, which will turn 100 in December, has never before witnessed. The selection of a chairman has typically been a matter handled privately by the president and his senior advisers.
In a statement on Sunday, Obama said he had accepted Summers’ decision.
“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,” Obama said.