Larry Summers (Reuters/Jason Reed)
When it became clear that members of President Obama's own party would not support a nomination of Larry Summers to serve as the next chairman of the Federal Reserve, something -- or someone -- had to give.
On Sunday, Summers gave up.
The former Treasury secretary, whose Clinton-era assaults on Glass-Steagall protections and opposition to the regulation of derivatives were blamed by critics for weakening safeguards against financial turbulence, withdrew his name from consideration for Fed's top job.
Remarkably, the decision came exactly five years after the financial meltdown of September 2008.
Progressive critics of Summers had argued for months that he was not the right candidate to tame the big banks -- or to address the fundamental challenges facing the US economy.
But Obama continued to consider the man who served as his director of the National Economic Council.
Now the president must find another nominee.
Obama is said to be considering several candidates. With Summers out, speculation will focus on the possibility that Federal Reserve Vice Chairman Janet Yellen, who has drawn significant support from key Democratic senators, may be chosen to replace outgoing Federal Reserve chair Ben Bernanke. But former Fed vice chairman Don Kohn is also thought to be in the running. And the president could consider others.
Obama does not have a lot of time, however. The selection must come before Bernanke is set to exit early next year.
The Summers withdrawal was a shocker. But it came for a reason.
Though he had friends in the White House, Summers faced mounting opposition from Democrats in the Senate and from grassroots progressive groups. The prospective nominee was criticized by women's organizations for controversial statements made during his tenure as president of Harvard. He was criticized for revolving-door Wall Street ties. And in the most dramatic show of anti-Summers sentiment, key Democratic senators began to signal in recent days that they could not confirm a man who has so frequently opposed needed regulation of the financial sector of the US economy.
"The truth is that it was unlikely he would have been confirmed by the Senate," said Senator Bernie Sanders, the Vermont independent who caucuses with the Democrats. "What the American people want now is a Fed chairman prepared to stand up to the greed, recklessness and illegal behavior on Wall Street, not a Wall Street insider whose deregulation efforts helped pave the way for a horrendous financial crisis and the worst economic downturn in the country since the Great Depression."
Sanders has long argued that the Senate should get more serious about checking and balancing the Federal Reserve.
The Fed is a staggeringly powerful institution, with the resources and influence to define the direction of the US economy, the character of the nation's "too-big-to-fail" banks and the extent to which unemployment issues are addressed.
Unfortunately, the Fed has a long history of serving Wall Street while neglecting the rest of the country. Be they Democrats or Republicans, be they theorists or doers, past Fed chairs have tended to embrace the thinking of the free-market fundamentalists and free-trade absolutists who have created an economy characterized by declining wages and expanding income inequality.