President Obama returns to economic themes this week just as his preferred candidate to lead the Federal Reserve, former Treasury Secretary Larry Summers, shocked many in Washington and on Wall Street by taking his name out of the running for the job.
In a phone call and letter Sunday, Summers told Obama that a fight over his nomination would be too acrimonious and possibly damaging to the Fed and the economy.
People close to Summers believe the White House waited too long to make the nomination, giving liberal Democrats time to organize a campaign to portray Summers as too close to banks and unfriendly to stronger regulation.
(Read more: Wall Street wanted Yellen anyway: CNBC survey)
Fairly or not, this characterization drove at least four Democratic members of the Senate Banking Committee to suggest to the White House that they would oppose Summers, meaning he would have needed significant GOP support just to get out of committee.
The White House might still have muscled Summers through but it would have meant cutting deals with Republicans, presumably on budget matters, something the White House does not want to do ahead of fights on funding the government and raising the debt ceiling.
(Read more: Bernanke staying still possible with Summers out?)
People close to the White House say current Fed Vice Chair Janet Yellen is now the overwhelming favorite to get the nod to succeed current chairman Ben Bernanke, whose term expires Jan. 31. Other candidates often mentioned include former Fed vice chairs Donald Kohn and Roger Ferguson.