Summers withdraws from race to succeed Bernanke at Fed

Former US Treasury Secretary Lawrence H. "Larry" Summers speaks during a financial and economic event at the London School of Economics (LSE) in London in this file photo from March 25, 2013. Former US treasury secretary Larry Summers withdrew S
Former US Treasury Secretary Lawrence H. "Larry" Summers speaks during a financial and economic event at the London School of Economics (LSE) in London in this file photo from March 25, 2013. Former US treasury secretary Larry Summers withdrew Sunday from the race to succeed Ben Bernanke as chairman of the Federal Reserve, in a surprise announcement. -- FILE PHOTO : REUTERS

WASHINGTON (AFP) - Former US treasury secretary Larry Summers withdrew Sunday from the race to succeed Ben Bernanke as chairman of the Federal Reserve, in a surprise announcement.

President Barack Obama said in a statement he had accepted Mr Summers' decision to withdraw his name from consideration for the pivotal economic post, in a telephone conversation following weeks of speculation over the appointment.

Mr Summers had been hotly tipped for the role but his candidature was accompanied by strong criticism of his record in the Bill Clinton era, with his opposition to regulating derivatives - blamed in part for causing the 2008 financial crisis - under scrutiny.

As well as working for then-president Clinton at the Treasury Department between 1999 and 2001, Mr Summers was Mr Obama's chief economic adviser for the first two years of Mr Obama's presidency.

"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 on Sunday.

The Wall Street Journal reported Mr Summers followed the phone call with a letter confirming his reasons for stepping aside.

"I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation's ongoing economic recovery," Summers wrote, according to the newspaper.

Despite opposition, even from members of his own party - some of whom see Mr Summers as too close to the Wall Street banks - Mr Obama chose Mr Summers as the man to help take the economy out of the 2008 crisis.

The 58-year-old has a reputation as a strong economist but has also struck many as overly brash, a man of sharp elbows in Washington's halls of power, with several key lawmakers arguing that a more conciliatory chair is needed to take over when Bernanke leaves his position, likely in January.

Current deputy Fed chair Janet Yellen had been seen as Summers' main competition for the role, with the White House noting that several other candidates were on a shortlist.