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Obama mulls Fed pick, defends Summers on 2009 stimulus

U.S. President Barack Obama pushed back on Wednesday against criticism of his former economic adviser, Lawrence Summers, who is seen as a leading candidate to become the new chairman of the Federal Reserve, Democratic lawmakers said.

Obama rejected recent complaints, largely from liberals, that Summers had not been aggressive enough in seeking economic-stimulus funds from Congress in 2009, lawmakers said.

But the Democrats also said Obama made it clear in closed-door meetings with them that he had made no decision on who he will pick as the new Fed chair, and that he has interviewed several possible nominees.

Speculation about Obama's choice to run the U.S. central bank has centered on Summers, 58, and Fed vice chairwoman Janet Yellen, 66, who has been a forceful advocate of the aggressive steps taken to spur economic growth by Ben Bernanke, whose term ends in January.

Opposition to Summers among Democrats has grown in recent weeks, with some blaming him for spearheading financial deregulation in the late 1990s as treasury secretary under then-President Bill Clinton - an effort that they contend ultimately led to the financial crisis a decade later.

Assistant Senate Democratic Leader Dick Durbin, who is among 20 or so senators who have signed a letter of support for Yellen, said, "I do believe she's expressed some progressive views of things I'd like to see at the Federal Reserve."

"If Larry Summers is the nominee, I have a number of questions. I'm not saying I'd vote against him, but I'll certainly ask a few questions," Durbin said.

Obama's Fed nominee will be sent to the Senate for confirmation.

In addition to Yellen and Summers, others seen as possible candidates include: former U.S. Treasury Secretary Timothy Geithner; Roger Ferguson, 61, the chief executive of retirement fund manager TIAA-CREF, who served as Fed vice chairman for seven years under Alan Greenspan; and Donald Kohn, 70, who retired as Fed vice chairman in 2010, capping a 40-year career at the central bank.

Donald Kohn, former vice chairman of the U.S. Federal Reserve
Mik Fuentes | Bloomberg | Getty Images
Donald Kohn, former vice chairman of the U.S. Federal Reserve

Pep Talk

Obama held back-to-back meetings at the Capitol with Democrats in the House of Representatives and the Senate to deliver a pep talk on his efforts to pump up the economy.

Responding to a question at the House session, Obama defended Summers against complaints that Summers was not aggressive enough in seeking more economic stimulus funds than Congress ultimately approved in 2009, about $800 billion.

"'You have to remember that during that period we were in a crisis, shedding 800,000 jobs a month. We needed a stimulus,"' Democratic Representative Carolyn Maloney quoted Obama as saying.

"'You can say that the stimulus should have been bigger, should have been stronger, but at the time we were struggling to get the $800 billion,"' the president added, Maloney said.

Representative Steve Israel said Obama "did talk about Larry Summers' qualities, but he also said there were many other candidates with their own qualities."

"This meeting was not an endorsement or lack of endorsement of Larry Summers or anybody else," Israel said.

Senate Majority Leader Harry Reid said Democrats will support whoever Obama picks, confident that they are all up for the job.

Reid said while he believes Summers is a "very competent man," some other Democrats have raised concerns about him.

Obama told Senate Democrats that he "has a long list of people he's talking to," Reid said.

"He indicated that there's not - his words - 'not a piece of paper difference in all of them,' so he's weighing all of the minuses and pluses and he's going to make a decision that he believes is right for the country," Reid said.

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