Down Goes Larry Summers! But Who Will Replace Him?

Posted by | September 21, 2010 18:35 | Filed under: Top Stories

By Yashwanth Manjunath

According to three individuals familiar with the matter and confirmed by Savannah Guthrie at MSNBC, White House officials expect Lawrence “Larry” Summers to leave the White House as Obama’s National Economic Council director and return to Harvard University. According to early speculation, the Obama administration has indicated that they would prefer a prominent corporate executive to replace Summers and prove they are not “anti-business.” A name being thrown around at the moment is Ann Fudge as a possible replacement. Fudge is the current director of GE and former CEO of Young and Rubicam Brands, so she fits what the administration appears to be looking for. A name I’d like to see considered is Brooksley Born, former head of the Commodity Futures Trading Commission during the Clinton administration.

Brooksley Born is one of the few people in Washington who accurately predicted more than a decade ago that over-the-counter derivatives would play a crucial role in the type of financial crisis we saw in 2008. At the time, Born was ridiculed for her dire (and accurate) warnings; the Wall Street Journal went so far as to report that “the nation’s top financial regulators wish Brooksley Born would just shut up.” But Born did not “shut up”  and was pushed out of the Clinton administration for her dissent by the two biggest Wall Streeters working for President Clinton, Robert Rubin and Larry Summers.

In 2009, Born was rewarded for her efforts with the JFK Profile in Courage Award “in recognition of the political courage she demonstrated in sounding early warnings about conditions that contributed to the current global financial crisis.” Replacing Summers with Born would be delicious irony now that the record has clearly vindicated her. Obama has a chance here to learn from Bill Clinton’s mistakes and do the right thing, not only for his presidency but also for the country. Unfortunately, the chance that Born actually gets the nod is about as likely as Dick Cheney being put on trial for War Crimes. Obama wouldn’t want to be seen as too “anti-business” by the Masters of the Universe for bringing in a tough regulator who will actually prevent them from endangering the entire global economy again. But hey, I can dream, can’t I?

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