President-elect Obama is looking back to the future for the leadership team he's appointing to run the government's response to the financial crisis.
Larry Summers has been tapped to head the National Economic Council -- a group inside the White House that advises the president on matters of domestic and international economic policy. Summers was President Clinton's last Treasury secretary and is widely respected for his brilliance as an economist and leadership during economic crises.
"As one of the great economic minds of our time, Larry has earned a global reputation for being able to cut to the heart of the most complex and novel policy challenges," Obama said. "With respect to both our current financial crisis, and other pressing economic issues of our time, his thinking, writing and speaking have set the terms of the debate. I am glad he will be by my side, playing the critical role of coordinating my Administration's economic policy in the White House -- and I will rely heavily on his advice as we navigate the uncharted waters of this economic crisis."
Summers' economic credentials are sterling -- an undergraduate degree from MIT and a doctoral degree in economics from Harvard. He has written influential academic papers, became one of the youngest tenured professors in Harvard's history at the age of 28 and served as chief economist of the World Bank. He even worked as an economic adviser in the Reagan administration.
"Larry Summers embodies a rare combination as one of the most respected scholars and one of the most influential public servants of his generation," Robert Stone, chairman of the Harvard presidential search committee, said in 2001.
His time at Treasury was marked by dramatic economic expansion, federal budget surpluses and effective government responses to the 1997 Asian and 1998 Russian financial crises. Summers is widely recognized as being an effective leader during his nine-year stint in various roles at the Treasury Department.
While Summers, 53, was widely rumored to be Obama's pick for the job of Treasury secretary, he comes with some baggage that hurt his chances for that top spot. That job went to Timothy Geithner, the president of the New York Federal Reserve.
It has also been reported that Obama will pick Summers as a possible successor to Federal Reserve chairman Ben Bernanke, whose term expires in January 2010.
After leaving Treasury in 2001, Summers became the president of Harvard. His tenure there was marked by a series of controversies.
The most damning was when he said basic genetic differences between the sexes may be one reason that fewer women succeed in math and science careers.
"Summers' suggestion that women are inferior to men in their ability to excel at math and science is more than an example of personal sexism," Kim Gandy, president of the National Organization of Women, said at the time. "It is a clue to why women have not been more fully accepted and integrated into the tenured faculty at Harvard since he has been president."
Controversies Surrounding SummersSummers resigned the presidency of Harvard a year after making the controversial speech. Some who know him say making the speech was "stupid," but it doesn't reflect his true feelings.
"What I think upsets me about this is that taking that incident aside, his track record on women is amazing," said Sheryl Sandberg, Summers' chief of staff during his days at Treasury. She is now chief operating officer of Facebook.
She said that in addition to consistently appointing women to positions of power and influence, he took up the cause of girls' education on a world stage well before it was fashionable.
"Larry did this speech on girls' education at the World Bank in 1992," Sandberg said. "We wrote this report and he gave his speech saying girls' education is the highest return financial investment you can make in your country. You want to help your economy? Start investing in girls' education."
Obama, apparently, overlooked the potential political fallout from women's groups when he tapped Summers for the job as the top economist in the administration, getting someone who has a well-defined sense of the financial world. Summers' appointment does not need Senate confirmation. The job of Treasury secretary does.
"He's fiscally responsible," Sandberg said. "He has a deep understanding of how markets work and, I think, has seen a lot from the political side, the academic side and the policy side of what really happens."
Summers, a self-described "market-oriented progressive," has been publicly outlining what he believes must be done to address the economic crisis.
"I think moving beyond a 'trust the market no matter what, what's best for Wall Street is what's best for America' approach to the financial markets is important if the economy is to work," Summers told Portfolio earlier this year. "That's what Sen. Obama favors."
In his regular column for the Financial Times, Summers offered a prescription for a new regulatory order, including reducing the number of financial system regulators, focusing government efforts on maintaining the health of the entire system instead of the practices of individual companies and making sure financial firms do not get "too big to fail."
Can Summers Lead a Better Economy?
Summers has made several public appearances lately, focusing his remarks on the roots of the economic crisis and what it means for the United States in the future, leading many people to believe he's the right man for what is arguably one of the most difficult jobs in all of government service.
"Larry can be brilliant, pedantic and arrogant," economist Diane Swonk said in a report she wrote after seeing Summers address the National Association of Business Economics in October. "Ask anyone who had to work with him when he was Treasury secretary in the late 1990s. But that was then and this is now. He showed NABE [the national association] that he could be self-deprecating, humble and wise. He showed us he could be a good leader, something that has been missing from the political arena for some time."