Larry Summers

[Magda Hassan]

Lawrence Henry Summers (born November 30, 1954) is an American economist and the Director of the White House's National Economic Council for President Barack Obama.[2] Summers is the Charles W. Eliot University Professor at Harvard University's Kennedy School of Government. He is the 1993 recipient of the John Bates Clark Medal for his work in several fields of economics and was Secretary of the Treasury for the last year and a half of the Clinton Administration.
Summers also served as the 27th President of Harvard University from 2001 to 2006. Summers resigned as Harvard's president in the wake of a no-confidence vote by Harvard faculty that resulted in part from Summers' conflict with Cornel West, conflict of interest questions regarding his relationship with Andrei Shleifer, and a 2005 speech in which he suggested that the under-representation of women in the top levels of academia is due to a "different availability of aptitude at the high end." Summers has also been criticized by some liberals for the economic policies he advocated as Treasury Secretary and in later writings.[3] Since returning to government in the Obama administration, he has come under fire for his numerous financial ties to Wall Street.
Family and education

Born in New Haven, Connecticut, on November 30, 1954, Summers was born into a Jewish family, the son of two economists, Robert Summers and Anita Summers, who are both professors at the University of Pennsylvania, as well as the nephew of two Nobel laureates in economics: Paul Samuelson (sibling of Robert Summers, who, following an older brother's example, changed the family name from Samuelson to Summers) and Kenneth Arrow (Anita Summers's brother). He spent most of his childhood in Penn Valley, Pennsylvania, a suburb of Philadelphia, where he attended Harriton High School.
At age 16,[4] he entered the Massachusetts Institute of Technology (MIT), where he originally intended to study physics but soon switched to economics (S.B., 1975). He was also an active member of the MIT debating team. He attended Harvard University as a graduate student (Ph.D., 1982), where he studied under economist Martin Feldstein. In 1983, at age 28, Summers became one of the youngest tenured professors in Harvard's history. Summers has three children (older twin daughters Ruth and Pamela and son Harry) with his first wife, Victoria Perry. In December 2005, Summers married English professor Elisa New, who had three daughters from a previous marriage. He currently owns two houses, one in Washington, D.C. and one in Brookline, Massachusetts.
Career

Academic economist

As a researcher, Summers has made important contributions in many areas of economics, primarily public finance, labor economics, financial economics, and macroeconomics. Some of Summers' early papers concluded that corporate and capital gains taxes are an inefficient form of taxation.[citation needed] Cutting the capital gains tax rate, Summers found, could help the economy grow.[citation needed] Later, while working in the Reagan and Clinton White Houses, Summers was able to lobby successfully for cuts in both corporate and capital gains taxes.[citation needed] One of Summers' prominent findings in labor economics is that unemployment insurance and welfare payments are a major contributor to unemployment, and therefore should be scaled back.[5]
Summers has also worked in international economics, economic demography, economic history, and development economics. His work generally emphasizes the analysis of empirical economic data in order to answer well-defined questions (for example: Does saving respond to after-tax interest rates? Are the returns from stocks and stock portfolios predictable?, Are most of those who receive unemployment benefits only transitorily unemployed?, etc.) For his work he received the John Bates Clark Medal in 1993 from the American Economic Association. In 1987 he was the first social scientist to win the Alan T. Waterman Award from the National Science Foundation. Summers is also a member of the National Academy of Sciences.
Public official

Summers was on the staff of the Council of Economic Advisers under President Reagan from 1982-1983. He also served as an economic adviser to the Dukakis Presidential campaign in 1988.
Chief Economist at the World Bank

Summers left Harvard in 1991 and served as Chief Economist for the World Bank until 1993.
"Dirty Industries" controversy

Further information: Summers memo
In December 1991, while at the World Bank, Summers wrote a memo, which was leaked to the press. The memo promoted dumping toxic waste in developing countries, citing economic benefits. In the memo Summers suggested that he thought "the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that . . . I've always thought that under-populated countries in Africa are vastly underpolluted."[6] After the memo was leaked, and controversy arose, staff economist Lant Pritchett, who worked under Summers claimed that he had written the article, and that Summers had only signed it.
Service in the Clinton Administration

In 1993 Summers was appointed Undersecretary for International Affairs and later in the United States Department of the Treasury under the Clinton Administration. In 1995, he was promoted to Deputy Secretary of the Treasury under his long-time political mentor Robert Rubin. In 1999, he succeeded Rubin as Secretary of the Treasury.
Much of Summers's tenure at the Treasury Department was focused on international economic issues. He was deeply involved in Clinton administration's effort to bail out Mexico and Russia when those nations had currency crises.[7] Summers encouraged then-Russian leader Boris Yeltsin to use the same "three-'ations'" of policy he advocated in the Clinton Administration-- "privatization, stabilization, and liberalization."[8]
Summers pressured the Korean government to raise its interest rates and balance its budget in the midst of a recession, policies criticized by Paul Krugman and Joseph Stiglitz.[9] According to the book The Chastening, by Paul Blustein, during this crisis, Summers, along with Paul Wolfowitz, pushed for regime change in Indonesia.[10]
As Treasury Secretary, Summers led the Clinton Administration's opposition to tax cuts proposed by the Republican Congress in 1999.[11] Also during his stint in the Clinton Administration, Summers was successful in pushing for capital gains tax cuts.[citation needed] During the California energy crisis of 2000, then-Treasury Secretary Summers teamed with Alan Greenspan and Enron executive Kenneth Lay to lecture California Governor Gray Davis on the causes of the crisis, explaining that the problem was excessive government regulation.[12] Under the advice of Kenneth Lay, Summers urged Davis to relax California's environmental standards in order to reassure the markets.[13]
Summers hailed the Gramm-Leach-Bliley Act in 1999, which lifted more than six decades of restrictions against banks offering commercial banking, insurance, and investment services (by repealing key provisions in the 1933 Glass-Steagall Act): "Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century," Summers said.[14] "This historic legislation will better enable American companies to compete in the new economy."[14] Many critics, including President Barack Obama, have suggested the 2007 subprime mortgage financial crisis was caused by the partial repeal of the 1933 Glass-Steagall Act.[15] Indeed, as a member of President Clinton's Working Group on Financial Markets, Summers, along with U.S. Securities and Exchange Commission (SEC) Chairman Arthur Levitt, Fed Chairman Greenspan, and Secretary Rubin, torpedoed an effort to regulate the derivatives that many blame for bringing the financial market down in Fall 2008.[16]
President of Harvard

He left the Treasury Department in 2001 when George W. Bush became President and returned to Harvard as its 27th President, serving from July 2001 until June 2006. He was Harvard's first Jewish president, and received praise from Harvard's Jewish community for his support.[17]
A number of his decisions at Harvard attracted public controversy:
Cornel West affair

In an October 2001 meeting, Summers criticized African American Studies department head Cornel West for allegedly missing three weeks of classes to work on the Bill Bradley presidential campaign, and complained that West was contributing to grade inflation. Summers also said that West's rap album was an embarrassment to the university, and that West needed to do more scholarly work. West denied the accusations.[18] West, who later called Summers both "uninformed" and "an unprincipled power player" in describing this encounter in his book Democracy Matters (2004), subsequently returned to Princeton University, where he taught prior to Harvard University.
Differences between the sexes

In January 2005, at a Conference on Diversifying the Science & Engineering Workforce sponsored by the National Bureau of Economic Research, Summers sparked controversy with his discussion of why women may have been underrepresented "in tenured positions in science and engineering at top universities and research institutions". In the previous year at Harvard, where Summers was president, 88 percent (28 of 32) of newly tenured faculty had been men.[19]
Summers began[20] by outlining three possible explanations for the higher proportion of men in high-end science and engineering positions. Two of the hypotheses were: (1) that women with children are unwilling or unable to work 80 hours per week in tenure track jobs and (2) that women are subject to both discrimination and different socialization. He argued that discrimination was economically unlikely because it would put institutions at a disadvantage compared to institutions that did not discriminate. And he dismissed socialization, claiming that research shows that socialization is rarely a factor in anything anyone thinks it is.[20]
His third and most controversial hypothesis was what he called "the different availability of aptitude at the high end". He said that his "best guess" was that "there are issues of intrinsic aptitude, and particularly of the variability of aptitude," such as that men tend to have a broader range of I.Q. scores than women, with men as a group scoring higher and lower than women as a group. Summers suggested that this variation, combined with other factors, "probably explains a fair amount of this problem." He stated that in his view, this was a more important cause of the problem than "different socialization and patterns of discrimination".[20]
Summers claimed that he was adopting an "entirely positive, rather than normative approach" and that his remarks were intended to be an "attempt at provocation."[20] Nancy Hopkins, a professor of biology at MIT, walked out during the talk in disgust.[21] Summers' lunch-time talk drew accusations of sexism and careless scholarship, and an intense negative response followed, both nationally and at Harvard.[21] Summers apologized repeatedly, and Slate's William Saletan[22] , a graduate of Swarthmore College, argues that, despite the controversy, most of Summers' initial comments during his lecture were supported by reliable research and additionally that "Summers is being forced to apologize, in the style of a Communist show trial." On the other hand, Dr. Carol Greider, professor of biology at Johns Hopkins University, and co-winner of the 2009 Nobel Prize for Medicine, has told reporters that she was "astounded" by Summers' remarks, and even checked the verbatim transcript to be sure that his remarks had been reported correctly.
The controversy contributed to his resigning his position as president of Harvard University the following year, and David Usborne of The Independent asserted that the incident cost Summers the job of Treasury Secretary in Obama's administration.[23]
Summers' opposition and support at Harvard

On March 15, 2005, members of the Harvard Faculty of Arts and Sciences, which instructs graduate students in GSAS and undergraduates in Harvard College, passed 218–185 a motion of "lack of confidence" in the leadership of Summers, with 18 abstentions. A second motion that offered a milder censure of the president passed 253 to 137, also with 18 abstentions.
The members of the Harvard Corporation, the University's highest governing body, are in charge of the selection of the president and issued statements strongly supporting Summers.
FAS faculty were not unanimous in their comments on Summers. Influential psychologist Steven Pinker defended the legitimacy of Summers' January lecture. When asked if Summers' talk was "within the pale of legitimate academic discourse," Pinker responded "Good grief, shouldn’t everything be within the pale of legitimate academic discourse, as long as it is presented with some degree of rigor? That’s the difference between a university and a madrassa. [...] There is certainly enough evidence for the hypothesis to be taken seriously."[24]
Summers had stronger support among Harvard College students than among the college faculty. One poll by the Harvard Crimson indicated that students opposed his resignation by a three-to-one margin, with 57% of responding students opposing his resignation and 19% supporting it.[25]
In July 2005, the only African-American board member of Harvard Corporation, Conrad K. Harper, resigned saying he was angered both by the university president's comments about women and by Summers being given a salary increase. The resignation letter to the president said, "I could not and cannot support a raise in your salary, ... I believe that Harvard's best interests require your resignation."[26][27]
Support of economist Andrei Shleifer

Harvard and Andrei Shleifer, a close friend and protege of Summers, controversially paid $28.5 million to settle a lawsuit by the U.S. government over the conflict of interest Shleifer had while advising Russia's privatisation program. The US government had sued Shleifer under the False Claims Act, as he bought Russian stocks and while designing the country's privatisation. In 2004, a federal judge ruled that while Harvard had violated the contract, Shleifer and his associate alone were liable for treble damages.
In June 2005, Harvard and Shleifer announced that they had reached a tentative settlement with the US government. In August, Harvard, Shleifer and the Department of Justice reached an agreement under which the university paid $26.5 million to settle the five-year-old lawsuit. Shleifer was also responsible for paying $2 million dollars worth of damages.
Because Harvard paid almost all of the damages and allowed Shleifer to retain his faculty position, the settlement provoked allegations of favoritism on Summers. His continued support for Shleifer strengthened Summers' unpopularity with other professors:
"I’ve been a member of this Faculty for over 45 years, and I am no longer easily shocked," is how Frederick H. Abernathy, the McKay professor of mechanical engineering, began his biting comments about the Shleifer case at Tuesday’s fiery Faculty meeting. But, Abernathy continued, "I was deeply shocked and disappointed by the actions of this University" in the Shleifer affair.
In an 18,000-word article in Institutional Investor (magazine) (January, 2006), the magazine detailed Shleifer’s alleged efforts to use his inside knowledge of and sway over the Russian economy in order to make lucrative personal investments, all while leading a Harvard group, advising the Russian government, that was under contract with the U.S. The article suggests that Summers shielded his fellow economist from disciplinary action by the University.[28] Summers' friendship with Shleifer was well known by the Corporation when it selected him to succeed Rudenstine and Summers recused himself from all proceedings with Shleifer, whose case was actually handled by an independent committee led by Derek Bok.
Losses on financial derivatives

During Summers' presidency at Harvard, the University entered into a series totalling US$3.52 billion of interest rate swaps, financial derivatives that can be used for either hedging or speculation.[29] By late 2008, those positions had lost approximately $1 billion in value. This forced Harvard to borrow significant sums in distressed market conditions to meet margin calls on the swaps.[30] The decision to enter into the swap positions has been attributed to Summers and has been termed a "massive interest-rate gamble" that ended badly.[31]
Resignation as Harvard President

Summers sparked international outrage by speculating at an economics conference that innate differences between men and women might be one of the reasons women lag behind in science and math careers. As a result, on February 21, 2006, Summers announced his intention to step down at the end of the school year effective June 30, 2006. Former University President Derek Bok acted as Interim President while the University conducted a search for a replacement which ended with the naming of Drew Gilpin Faust on February 11, 2007. After a one year sabbatical, Summers subsequently accepted the University's invitation to serve as the Charles W. Eliot University Professor, one of twenty select University-wide professorships, with offices in the Kennedy School of Government and the Harvard Business School.[32] He also joined the D. E. Shaw Group in October 2006 as a part-time managing director.[33] Summers also has been authoring a column for the Financial Times.[34]
Post-Harvard career

On October 19, 2006, he became a part-time managing director of the investment and technology development firm D. E. Shaw & Co. He was paid $5.2 million in his second of two years working there, while being physically present in the office just one day a week.[35]
Upon the death of libertarian economist Milton Friedman, Summers wrote an Op-Ed in The New York Times entitled "The Great Liberator" arguing that "any honest Democrat will admit that we are now all Friedmanites." Summers wrote that while Friedman made real contributions to monetary policy, his real contribution was "in convincing people of the importance of allowing free markets to operate."[36]
Henry Kissinger once said that Larry Summers should "be given a White House post in which he was charged with shooting down or fixing bad ideas." [37]
In 2006 he was a member of the Panel of Eminent Persons which reviewed the work of the United Nations Conference on Trade and Development.
National Economic Council

In 2009, he was tapped by President Obama to be the director of the White House National Economic Council.[2][38] He has emerged as a key economic decision-maker in the Obama administration, where he has attracted both praise and criticism. There has been friction between Summers and former Federal Reserve Chairman Paul Volcker, as Volcker has accused Summers of delaying the effort to organize a panel of outside economic advisers, and Summers has cut Volcker out of White House meetings and has not shown interest in collaborating on policy solutions to the current economic crisis.[39] On the other hand, Obama himself was reportedly thrilled with the work Summers did in his first few weeks on the job. And Peter Orzag, another top economic advisor, calls Summers "one of the world’s most brilliant economists."[40]
In January 2009, as the Obama Administration tried to pass an economic stimulus spending bill, Oregon Democratic Representative Peter DeFazio criticized Summers, saying that he thought that President Barack Obama is "ill-advised by Larry Summers. Larry Summers hates infrastructure."[41] DeFazio, along with liberal economists including Paul Krugman and Joseph Stiglitz, has argued that more of the stimulus should be spent on infrastructure,[42] while Summers has supported tax cuts.[citation needed]
Summers has recently come under fire for accepting perks from Citigroup, including free rides on its corporate jet in 2008.[43] According to the Wall Street Journal, Larry Summers called Chris Dodd asking him to remove caps on executive pay at firms which have received stimulus money, including Citigroup.[44]
On April 3, 2009 Summers came under renewed criticism after it was disclosed that he was paid millions of dollars the previous year by companies which he now has influence over as a public servant. He earned $5 million from the hedge fund D. E. Shaw, and collected $2.7 million in speaking fees from Wall Street companies that received government bailout money.[45]
Notes

See also: Ivy League Presidents
References

1. ^ Tapper, Jake. "Summers Says Financial System That Causes One Crisis Every Three Years Demands Reforms", ABC News, October 16, 2009
   
2. ^ a b change.gov (November 24, 2008). "Geithner, Summers among key economic team members announced today" (Official website). Newsroom. Office of the President-elect. http://change.gov/newsroom/entry/geithne...ced_today/. Retrieved November 24, 2008.
   
3. ^ Obama picks Summers as top economic adviser. CNN Money. November 23, 2008.
   
4. ^ Plotz, David."Larry Summers: How the Great Brain learned to grin and bear it.", Slate, June 29, 2001.
   
5. ^ Summers, Larry. "Unemployment". The Concise Encyclopedia of Economics. http://www.econlib.org/library/Enc/Unemployment.html.
   
6. ^ Office Memorandum from Lawrence M. Summers, Subject: GEP, the World Bank/IMFMIGA, 12 Dec 1991. This was an internal memo at the World Bank not intended for the public that highlighted the economic logic of dumping waste in less-developed countries.
   
7. ^ A New Economic Team: The Nominee; The Administration's Fiscal Closer. The New York Times. May 13, 1999.
   
8. ^ Naomi Klein, "The Shock Doctrine" page 231
   
9. ^ Blustein, Paul (2001). "'The Chastening'". Public Affairs, New York. http://www.publicaffairsbooks.com/public...1586481810.
   
10. ^ Blustein, Paul (2001). "'The Chastening'". Public Affairs, New York. p. 232. http://www.publicaffairsbooks.com/public...1586481810.
    
11. ^ Aides Say Clinton Would Veto Tax Compromise. The Washington Post. July 26, 1999.
    
12. ^ Krugman, Paul. "California Energy Memories". The New York Times. http://krugman.blogs.nytimes.com/2008/11...-memories/.
    
13. ^ Gibney, Alex. "Larry Summers' Enron Problem". The Daily Beast. http://www.thedailybeast.com/blogs-and-s...and-enron/.
    
14. ^ a b Labaton, Stephen (November 5, 1999). "Congress Passes Wide Ranging Law Repealing Bank laws". New York Times. http://www.nytimes.com/1999/11/05/busine...-laws.html. Retrieved March 25, 2009.
    
15. ^ "Ten Questions for Those Fixing the Financial Mess". Wall Street Journal. March 10, 2009. http://online.wsj.com/article/SB123665023774979341.html. Retrieved March 26, 2009.
    
16. ^ "the warning". Frontline/PBS. October 23, 2009. http://www.pbs.org/wgbh/pages/frontline/.../#morelink. Retrieved October 26, 2009.
    
17. ^ Harvard’s First Jewish President. The Harvard Crimson. March 8, 2006
    
18. ^ "Some seek a scholar's return". The Boston Globe. June 6, 2006. http://www.boston.com/news/local/article...rs_return/.
    
19. ^ http://www.boston.com/news/local/article...draw_fire/
    
20. ^ a b c d Archive of: Remarks at NBER Conference on Diversifying the Science & Engineering Workforce. January 14, 2005.
    
21. ^ a b Summer's Remarks on Women Draw Fire. The Boston Globe. January 17, 2005
    
22. ^ Saletan, William. "Don't Worry Your Pretty Little Head", Slate, January 21, 2005.
    
23. ^ Summers' 'sexism' costs him top Treasury job. The Independent. November 24, 2008
    
24. ^ Psychoanalysis Q-and-A: Steven Pinker. The Harvard Crimson. January 19, 2005
    
25. ^ Poll: Students Say Summers Should Stay. The Harvard Crimson. February 20, 2006
    
26. ^ A Harvard Governor, Dissatisfied, Resigns July 29, 2005
    
27. ^ Board Member's Letter of Resignation. The New York Times. August 2, 2005
    
28. ^ ‘Tawdry Shleifer Affair’ Stokes Faculty Anger Toward Summers. The Harvard Crimson. February 10, 2006
    
29. ^ Quint, Michael; Gillian Wee (2009-03-03). "Harvard Losing AAA Benefit in Market Shows Swap Risk". Bloomberg.com. http://www.bloomberg.com/apps/news?pid=2...3zn49Q9Zww. Retrieved 2009-07-24.
    
30. ^ Munk, Nina (2009-08). "Rich Harvard, Poor Harvard". Vanity Fair (Conde Nast). http://www.vanityfair.com/politics/featu...vard200908. Retrieved 2009-07-24.
    
31. ^ Salmon, Felix (2009-07-24). "Larry Summers’s billion-dollar Harvard gamble". Reuters.com. http://blogs.reuters.com/felix-salmon/20...rd-gamble/. Retrieved 2009-07-24.
    
32. ^ Schuker, Daniel J. T. (July 7, 2006). "Summers Named Eliot Univ. Prof". The Harvard Crimson. http://www.thecrimson.com/article.aspx?ref=513918.
    
33. ^ Burton, Katherine (October 19, 2006). "Summers, Former Treasury Secretary, Joins D.E. Shaw". Bloomberg. http://www.bloomberg.com/apps/news?pid=2...refer=home.
    
34. ^ Lawrence Summers, Columist as Financial Times.
    
35. ^ http://www.nytimes.com/2009/04/06/busine....html?_r=1
    
36. ^ Summers, Larry (November 19, 2006). "The Great Liberator". The New York Times. http://www.nytimes.com/2006/11/19/opinio...mmers.html.
    
37. ^ Leonhardt, David (November 25, 2008). "The Return of Larry Summers". The New York Times. http://www.nytimes.com/2008/11/26/busine...hardt.html.
    
38. ^ Bohan, Caren (November 24, 2008). "Obama taps Geithner, Summers". U.S. News (Reuters). http://www.reuters.com/article/newsOne/i...A220081123. Retrieved November 24, 2008.
    
39. ^ Schmidt, Robert; Julianna Goldman (February 5, 2009). "= Volcker Chafes at Obama Panel Delay, Strains With Summers Rise". Bloomberg. http://www.bloomberg.com/apps/news?pid=w...LzJZKNcc6Y =.
    
40. ^ http://www.nytimes.com/2009/06/08/us/pol...8team.html
    
41. ^ DeFazio, Peter; Video Interview (January 2008). "DeFazio Slams Summers". http://firedoglake.com/2009/01/23/defazi...structure/.
    
42. ^ Krugman, Paul (January 6, 2009). "Stimulus Arithmetic (wonkish but important)". The New York Times. http://krugman.blogs.nytimes.com/2009/01...important/.
    
43. ^ Fitzgerald, Jay (February 11, 2009). "= Larry Summers Jet Ride Called Part of Larger Problem". Boston Herald. http://www.bostonherald.com/business/gen...r_problem/ =.
    
44. ^ Soloman, Deborah; Mark Maremont (February 14-15, 2009). "[= Bankers Face Strict Pay Cap]". Wall Street Journal. pp. 1, above the fold. =.
    
45. ^ Zeleny, Jeff (April 3, 2009). "Financial Industry Paid Millions to Obama Aide". The New York Times. http://www.nytimes.com/2009/04/04/us/pol...close.html. Retrieved April 4, 2009.
    

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[Magda Hassan]

Endless Summers


Throughout his dazzling but controversial career—top World Bank economist, Treasury secretary, Harvard University president, and now head of the White House National Economic Council—Larry Summers has been his own worst enemy. As friends, colleagues, and Summers himself try to explain his reputation for arrogance, bullying, and insensitivity, the author learns about his more private battles, and why many believe he’s still the M.V.P. in any financial crisis.

[B]By William D. Cohan


December 2009
[/B]


Larry Summers in his West Wing office, two short flights of steps above the Oval Office. Photograph by Steve Pike.

Larry Summers is not an easy man to catch off guard. Behind his rumpled, jowly, professorial façade hides the world’s shiniest gold-plated résumé and one of its fiercest intellects. No less an authority on presidential power than Henry Kissinger once told Tim Geithner, now the Treasury secretary, that Summers should have a permanent job at the White House, solely to sort out for the president—any president—the good ideas on economic policy from the dumb ones.
When Barack Obama was elected, many thought that Summers, who headed Treasury during the final 18 months of the Clinton administration, would find his way back to that post. But inside the Beltway, Summers’s connections to New York hedge funds and his rocky tenure as the president of Harvard University, from 2001 to 2006, were of concern, and it was decided that Geithner, Summers’s former colleague at Treasury and the president of the Federal Reserve Bank of New York (a job he got in 2003 with Summers’s help), would be more easily confirmed by the Senate. But since Geithner goes back some 10 years or more with Summers and seems to think five minutes with Summers is worth an hour of most other people’s time, there is little evidence that Summers lacks for influence in his current post as director of the White House’s National Economic Council.
View Vanity Fair’s Obama White House Portfolio, photographed by Annie Leibovitz.

Wedged into a faded-yellow upholstered wingback chair in his cramped White House office—two short flights of steps above the Oval Office—Summers is not yet, just before noon, in full pontification mode, even though he’s been up for hours and is fully caffeinated. His ubiquitous can of Diet Coke is perched an arm’s length away, on the edge of his desk behind his multiple computer screens. Two empties are scattered elsewhere. His kinetic, amped-up energy fills the small room, and, as usual, he has little time for the social niceties. Ask whether the odds favor the Boston Red Sox—in first place in the American League East on July 4—to make the playoffs this season and he shoots his press attaché, Matt Vogel, a withering look. The Great Oz has clearly expected a weightier question—about when the recession will end, or whether health-care reform will pass Congress. Indicating Vogel, he says, “He doesn’t know what you’re talking about. He doesn’t know where this is coming from, I’ll bet. You’re referring to the teams that are ahead on July 4 normally winning the pennant, even when they have a relatively small margin, like the Red Sox do.”
When Summers was a sixth-grader, at Penn Valley School, in Lower Merion, Pennsylvania, he spent part of his summer riffling through the microfilmed sports pages of old newspapers and magazines dating back to 1930, in order to determine if there was any correlation between where a team was in the standings on Independence Day and whether that team eventually made the playoffs. His parents—Robert and Anita, then economics professors at, respectively, the University of Pennsylvania and Bryn Mawr College—had encouraged him in his quirky mission and helped him calculate the odds. As the Vietnam War was heating up in October 1965, the Philadelphia Bulletin described Summers as “the most qualified 11-year-old odds maker” in baseball.
Calculating the odds of making the playoffs is very different these days, Summers tells me, warming to the topic, given the introduction over the years of divisions within leagues and the advent of the wild-card spot, all of which makes it so that four teams in each league go to the playoffs instead of just one. Anyway, he concludes, “My proud father has chip-shotted that [anecdote] into profiles of me that have been written at various points, and that must be what you encountered.”
Summers has plenty of other things figured out as well, including the origins of the current financial crisis, for which he has crafted a cogent explanation worthy of his reputation as a policy wonk and his days as a college debating champion at M.I.T. “I think crises like this get made by multiple cascading misjudgments,” he explains, and then catalogues them: too much government spending, not enough private-sector saving, too much dependence on foreign debt, too much demand for “riskless” financial instruments that weren’t, in fact, riskless …
By the time he’s finished, he’s barely breathing, the words are tumbling from his mouth so quickly. But then he sums it all up in his trademark way of making the complexities of economics and finance comprehensible to mere mortals: “The classic stories about markets are where, if the market for wheat goes down, people plant a little wheat. People demand to eat a little more bread, and the thing self-stabilizes. But it was [economist John Maynard] Keynes’s central insight that it’s not always that way. And it’s not always that way in particular because leverage [i.e., borrowing] can create situations where, when prices fall, then people have to sell, and so they fall faster. When asset prices fall, capital values fall, and, therefore, people are in less of a position to lend, and, therefore, other people are forced to sell. And there’s a whole set of these vicious cycles. You can also have a change in gestalt where people who had perceived things as safe all of a sudden move things from the concept of being safe to the concept of being risky, and if they’re risky, they don’t want to hold them. And so you see a large scale of abandonment. And I think in one way or another the leverage, the vicious cycle, the change in gestalt, the unwinding—that’s the financial crisis.”
Summers had a pretty good handle on the crisis even as it was unfolding. Ten days before the collapse of Bear Stearns, in March 2008, he said in a speech at Stanford University, “We are facing the most serious combination of macro-economic and financial stresses that the U.S. has faced in a generation and possibly much longer.”
But while the housing and mortgage bubbles were busy inflating a few years back, Summers was convalescing after his tortured departure as Harvard’s president, in June 2006. He had resigned that February in the face of a second no-confidence vote the Harvard faculty was prepared to deliver. The first had come a year earlier, following his impolitic and ill-advised—but severely taken out of context—comments about a lack of scientific aptitude among women. Summers had spoken at a private conference from notes, so there is no transcript of the speech. But afterward an M.I.T. professor provided snippets of it to a Boston Globe reporter, and a media frenzy ensued. Summers told The Harvard Crimson, “Everyone agrees that working toward gender equity is vitally important,” and discrimination must be faced “head-on.” But, he said, academics must also conduct “careful, honest, and rigorous research” to understand why women are too often under-represented in certain professions. “My speculations were intended to contribute to that process,” he said, but he has also admitted making the speech was a mistake.
That wasn’t his only mistake at Harvard. In fact, people there have so many complaints about him it is difficult to know where to begin. Along with his ambitions to vastly expand the campus into Allston, displacing working-class residents from an affordable neighborhood, and to revamp the undergraduate curriculum by boosting the role given to the sciences, he also was said to have insulted, in addition to women, many of the diverse communities at the school—from blacks to gays to Hispanics. He was criticized for his uncouth per*sonal style—from toothpicks dangling from his mouth to stocking feet up on his desk during meetings—for cutting off questioners in midstream, and for his tendency to look right through people while they talk. There was also his tone-deaf willingness to autograph for students dollar bills that already had his signature on them (from when he was Treasury secretary) and to replace his predecessor’s “aging Lincoln” with a brand-new Town Car. “That shiny black sedan soon started popping up all over campus, with Summers’s chauffeur waiting patiently inside, sometimes for hours at a time,” wrote Summers’s erstwhile biographer, Richard Bradley, who chonicled many of Summers’s perceived foibles at the university and elsewhere in Boston magazine and in his 2005 book, Harvard Rules.
After leaving Harvard, Summers signed on at D. E. Shaw, a $29 billion hedge fund, which gave him his first real-world taste of the psychological—as well as economic—dilemmas confronting traders on a daily basis. (He also got a taste of Wall Street compensation, receiving $5.2 million in 2008 working just one day a week.) The D. E. Shaw gig followed being on the board of advisers of Taconic Capital Advisors, a hedge fund founded by Goldman Sachs alumni Frank Brosens and Ken Brody. And for a total of $2.7 million in 2008 he was also giving regular and high-priced speeches to corporate America. (For instance, in April 2008, Summers spoke at Goldman Sachs, for $135,000; in February, he spoke at J. P. Morgan, for $67,500; in April, he spoke at Leh*man Brothers, for $67,500; and in May, he spoke at Siguler Guff, a New York–based hedge fund, for $67,500.)


Yet Summers has triumphed over his Harvard controversies and the charges that he grew too close to the financial sector. The hand—and mind—of Larry Summers can be found in the $819 billion stimulus package, in the bailouts of Chrysler and General Motors, and in the legislation still under consideration in Congress that would reform both health care and Wall Street regulations. And he’s just getting revved up.
Nowadays, after leading a briefing for the president every morning on the economy—called the “economics P.D.B.” (for “President’s Daily Brief”)—he spends his time with his team of around 25 staffers and his colleagues—who include Geithner, chair of the Council of Economic Advisors Christina Romer, head of the Office of Management and Budget Peter Orszag, and Austan Goolsbee, an economist on the Council of Economic Advisors—trying to craft policies to deal with the aftermath of the meltdown. “The good thing about us is we’ve known each other for a really long time, and we’re completely comfortable disagreeing with each other,” Geithner says of his symbiotic working relationship with Summers.
Nobel Lineage

Summers is part of a generation of gifted Philadelphia-area Jewish boys, which includes private-equity mogul Steve Schwarzman and Revlon C.E.O. Ronald Perelman, who went on to make it big on the national scene. Unlike with Schwarzman and Perelman, who made billions in finance, the tug of Summers’s DNA was to academia and, specifically, to the study of economics. Not only are both his parents economists, but he is also the nephew of two winners of the Nobel Prize in Economics: Paul Samuelson (his father’s brother—Summers’s father changed the family name from Samuelson) and Kenneth Arrow (his mother’s brother). Larry, the oldest of three boys, alone among them chose to study economics. (The middle brother, Rick, is a psychiatrist in Bryn Mawr and a professor of psychiatry at Penn; his youngest brother, John, is a litigator at the law firm of Hangley Aronchick Segal & Pudlin, in Philadelphia.) “My father was an incredibly intellectual deep thinker with no ego,” Rick Summers recalls. “He was about ideas and about his work and about exploring things and about research. My father inspired Larry. They spent a lot of hours together, my father taught him a lot, and I think Larry just got incredibly naturally interested in what my father was interested in and took off from there.”
In 1971, at age 16, Summers applied to Harvard but was rejected. Instead, he matriculated at M.I.T.—a few miles and a world away from Harvard but one of the few elite universities at that time that could contain his prodigious intellect. At rapid-fire speed, he began the construction of a C.V. that is now 13 pages long and counting.
At first, he was a math major, but he realized quickly he was out of his element. He switched to economics and, as a sophomore, started working as a summer assistant to conservative Harvard economics professor Martin Feldstein, who would become one of his lifelong mentors. In 1974, Summers applied again to Harvard, this time for the doctoral program in economics, and this time the university accepted him.
While working on his dissertation Summers met Victoria Perry, who had studied economics at Yale and had moved to Cambridge to get acclimated before beginning Harvard Law School. Perry, who was once described as looking like she’d stepped out of an L. L. Bean catalogue, grew up an only child in Maine, where her mother was a math professor at the University of Maine and her father a stockbroker in a small firm in Bangor. She and Summers had mutual friends and, at first, hung out together as part of that group; then, in 1980, they started dating. “He was really smart and funny, interesting, and just a really good person,” she recalls.
At 28, Summers became one of the youngest tenured professors in Harvard’s history. He was on a superstar’s trajectory.
And then near tragedy struck. For two months, he had been nursing a persistent fever. At first, doctors at the Harvard health service told him it was nothing to worry about. But as his body temperature remained at or above 102 degrees, his parents insisted he get a second opinion. His blood was tested. “My blood counts were all off,” he recalls. He then had a bone-marrow test. “Do not pass go—you’re going from the doctor’s office to the hospital,” he was told. It took a while, but eventually he was diagnosed with late-stage Hodgkin’s disease. He had nine months of chemotherapy. “It was obviously terrifying,” he says.
He grappled with the news by remaining extremely focused on the study, writing, and teaching of economics. “If you looked at the list of publications,” he points out, “and you said, ‘What year was he sick?,’ you would not be able to tell. And that wasn’t because there was anything heroic about me. It was because the only way to kind of keep the stuff at bay was just to focus on my work and to focus on being around people.”
Summers, who remains cancer-free, credits the experience with giving him an ongoing interest in the study of the life sciences (a curriculum he advocated at Harvard) and in the promulgation of health-care-policy reforms, and, above all, a healthy appreciation of the fragility of human life and the special burdens put on the less fortunate. “The weak need you more than the strong do,” he says. “The feeling of extreme vulnerability that I had during that experience caused me to be more attentive to the people who are on the vulnerable side of the ledger.”
Toxic Shock

In 1984, soon after his cancer diagnosis, Summers and Victoria Perry were married at the elegant Harvard Club on Commonwealth Avenue, in Boston. Both a rabbi and a Congregationalist pastor presided at the ceremony, in front of about 150 of their friends and family. By this time, Victoria was a tax lawyer at Hale & Dorr, the old-line Boston law firm, and Larry was teaching at Harvard. Having looked into the abyss, Summers also became—if possible—even more professionally impatient. The economics papers and articles started pouring out of him, around 100 or so during the rest of the 1980s. In 1993 he won the John Bates Clark Medal, as had Samuelson, Arrow, and Feldstein before him. The award, now given every year, recognizes the work of an American economist under 40. Even though some rival economists questioned the depth and breadth of Summers’s insights into economics—some think him best at taking the ideas of others and articulating them with more aplomb—and wondered whether he would ever reach his uncles’ level of achievement, he could easily have soldiered on at Harvard in his capacity as the Nathaniel Ropes Professor of Political Economy.
But somewhere along the way Summers caught the bug of wanting to convert his economic theories into real-world solutions. In early 1988, along with Robert Reich, another Harvard professor, Summers was a regular—but unpaid—economic adviser to the Democratic presidential campaign of Michael Dukakis, the governor of Massachusetts, whom Summers knew from the neighborhood. “[Summers and Reich] were first among equals,” explains Gene Sperling, then one of Dukakis’s chief campaign aides and now counselor to the secretary of the Treasury, “and hungry to be involved.”
Summers was more than a bit wonkish, arguing that Dukakis should make proposals about copyright law or reforming gatt, the General Agreement on Tariffs and Trade. Finally, one day Dukakis blurted out, “Larry, gatt schmatt!” And that was the end of that. (“Larry likes to tell that story,” Sperling says.)
In the rough-and-tumble of the campaign, Summers met a new set of political allies, such as Sperling, George Stephanopoulos, Laura D’Andrea Tyson, and, most important, Robert Rubin, then a vice chairman at Goldman Sachs, all of whom would become lifelong friends. “It’s amazing how much goes back to that Dukakis campaign,” Sperling says. In 1991, Summers decided to leave Harvard to become the chief economist at the World Bank. (In the move to Washington, Perry got a job as a lawyer at the International Monetary Fund.) In December 1991 he signed and circulated a memorandum—written by a young World Bank economist, Lant Pritchett—that caused Summers no small amount of future heartache. In the memo, which was meant to be a satire on the scale of Swift’s “A Modest Proposal,” Pritchett wrote, “Just between you and me, shouldn’t the World Bank be encouraging more migration of the dirty industries to the LDCs [Least Developed Countries]?” He then gave three reasons for his conclusion, among them: “A given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.” A predictable firestorm accompanied the leak of the memo. Despite Pritchett’s offer to fall on his sword, Summers took the heat himself. World Bank president Lewis Preston called the memo “outrageous,” and Summers had to apologize publicly. “I think the best that can be said is to quote La Guardia and say, ‘When I make a mistake, it’s a whopper,’ ” Summers said at a March 2001 press conference when asked about the memo.


When Clinton won the presidency in 1992, many thought Summers would get the post Dukakis had slated for him: chairman of the Council of Economic Advisors. But “the toxic-memo scandal,” as it became known, loomed over his appointment. Laura Tyson got the job instead. Summers had to make do with an appointment as undersecretary of the Treasury for international affairs. (Geithner would have this job after Summers.) When Rubin became Treasury secretary, in January 1995, after two years serving as director of the National Economic Council, a post created by Clinton especially for him, Summers’s career finally got uncorked when Rubin promoted him to deputy Treasury secretary. The two men’s styles couldn’t have been more different—the low-key former Goldman Sachs co-chairman and arbitrageur with a penchant for consensus building, and the Harvard economics professor with the platinum DNA, encyclopedic memory, and legendary impatience—but, in the great tradition of Felix Unger and Oscar Madison, this odd couple, too, made it work in splendid fashion. Together, they tackled the Mexican financial crisis in 1995, the Asian one in 1997, the Russian one—which almost led to the near end of the world—and the Long-Term Capital Management crisis, both in the fall of 1998, the whole time presiding over one of the great booming economies in American history. The apotheosis came perhaps in February 1999, when Time put Rubin, Summers, and Fed chairman Alan Greenspan on its cover—Summers looking formidable behind Greenspan’s left shoulder—under the headline the committee to save the world, since that is exactly what they appeared to have been doing for so long.
Rubin credits Summers with making a “tremendous, tremendous intellectual contribution” to the Mexican crisis, which “people don’t remember so much now.” And he cites Summers’s willingness during intense discussions with President Clinton and other advisers to make sure the real-world consequences of policy proposals were being considered. “There’d be political people around the table, and Larry absolutely related to the political dimensions of things,” Rubin says, “but he had a tremendous seriousness of purpose, and he would always be one of the forces to bring the conversation back to ‘Yeah, that’s all important, and we can get some publicity or whatever, maybe. But what does it really mean? What are the long-term consequences? What effects will that have?’ And then he combined that with an ironic sense of the world. I think that’s a terrific combination.”
During these years, Summers and his wife had three children, who were raised Jewish: twin girls, Pamela and Ruth, born in 1990, and Harry, born in 1993. Understandably, between two high-powered jobs and three young children, the demands on both parents were enormous. Domestic chores were not Summers’s thing—he doesn’t cook or clean up much, although he would help do the dishes. “He took direction well,” Perry says dryly. Over time, though, they drifted apart. Perry does not care to discuss how this happened. For his part, Summers has rarely spoken of the dissolution of his marriage. “There are trade-offs in life,” he has said. “You can’t be negotiating through the night to prevent Mexico from going bankrupt and tucking your kids into bed that night.” He concedes, though, “There are choices that if I had to do again I would do differently.”
The couple separated in 2001, and their divorce was finalized in 2003. Perry took back her maiden name and—ironically—converted to Judaism. She has not remarried and says she has no regrets about her years with Summers. “Yes, certainly I’m glad that we were married,” Perry says. “We still talk regularly. And he’s still a good friend.”
School for Scandal

Upon Summers’s arrival back at Harvard, as its 27th president, and after having had a brief fling with conservative talk-show host Laura Ingraham, Summers was introduced by his friend and Harvard colleague Ken Rogoff to Lisa New, a recently separated Harvard English professor with three young children of her own. But there had to be a little orchestration of their initial meeting. New recalls that Rogoff’s wife, Natasha, “told me that he was the president of Harvard and he couldn’t go around hitting on faculty, so if I wanted to meet him I would have to call him.” With that resolved, they started talking on the phone, at first “for about three days” straight, and she was completely won over by him. “We had these marvelous, marvelous hours-and-hours-long conversations before we met,” she says. “He’s a really great talker. He’s a wordsmith. He’s very clever. His vocabulary for an economist is rich and surprising, and he’s really funny and just ferociously smart, and he loves the phone.” They decided to take the next step and meet in person for a date, which she decided should be at the fancy Persian restaurant Lala Rokh, on Beacon Hill, in Boston. Turns out Summers has little conception of time and is chronically late. He thought he could finish giving a speech at Harvard and somehow get to Beacon Hill in 10 minutes. “Larry’s always miscalculated time,” New says. “And he was quite late.” Still, they clicked from the first moment. They both come from “big, warmhearted” Jewish families in Philadelphia, she points out, and despite the differences in their intellectual disciplines, their chemistry was immediate. Engaged in October 2005, they were married two months later.
But these were the difficult years when Summers was having almost daily skirmishes with the Harvard Faculty of Arts and Sciences. Cornel West, then one of only 21 “university professors” at Harvard, had a major run-in with Summers early on. According to West and various contemporaneous accounts, in a first meeting Summers accused West of everything from spending too much time making hip-hop records to grading too easily, to missing classes when he was working on the ill-fated presidential campaigns of Bill Bradley, Ralph Nader, and Al Sharpton. Summers claimed that West had not published enough, when he had, in fact, written 15 books and edited 13 others. When the dispute hit the papers, West asked for a second meeting to try to clear the air. In that meeting, they actually had a “wonderful four or five minutes,” West says, when the two men shared their very personal fears and experiences with cancer. West had been recently diagnosed and thought he had only a few months to live, and he spoke to Summers about his fears for his family. “And he spoke about his mother in very moving ways, and I said to myself, Wow, I think we’re coming together. This is really fascinating,” West recalls. According to West, Summers apologized, and West says he told Summers he appreciated the apology “because I don’t think this has to be an ugly ad hominem affair. But I refuse to be disrespected. That’s the kind of man I am, that’s the kind of black man I am. I just won’t be disrespected.” They shook hands and parted. “I thought everything was cool,” West says.
The next day, The New York Times had the story of their second meeting, but with a line about how Summers had not apologized. West called Summers to try to understand how the account of their meeting had gotten so distorted. According to West, Summers told him that of course he had apologized and was unsure where the Times’s account had come from. West then spoke with people he knew at the Times and discovered, he says, that Summers had insisted to the paper he would not apologize. West was incensed. “That’s when I came out and said, ‘He’s a bull in a china shop’ and the ‘Ariel Sharon of higher education.’?” At that point, “all hell broke loose,” West says. He was accused of being anti-Semitic, and the story went viral. He responded that he was not anti-Semitic but rather was “just being honest,” because Summers was “untrustworthy,” was “unprincipled,” and “lacked character and integrity.” West quickly decided he had to leave Harvard. He resigned and returned to Princeton University, where he is a tenured professor.
West says he was not surprised when Summers resigned from Harvard, but he said he was “just shocked and stunned” when Obama selected Summers to be the head of the National Economic Council, instead of such economists as Paul Krugman, his Princeton colleague, or Joseph Stiglitz, a professor at Columbia and a Vanity Fair contributor (both of whom are Nobel laureates). West believes Obama must have decided that Summers would be more acceptable to the Establishment and to Wall Street. But he also believes that an opportunity may have been lost by putting Summers in that important seat.
“I think that both as Harvard president and now as head of the National Economic Council that with Summers you have this tension between braininess and a certain lack of long-term vision,” West says. “And I really believe we need some long-term vision right now. The smartness and the brilliance, on the one hand, is fine, but I feel like you also have to treat others with a courtesy or a civility or even a decency at times.” (Summers wouldn’t comment on the West affair.)


There were also charges of betrayal from Iris Mack, a former derivatives specialist at the Harvard Management Company (responsible for investing Harvard’s endowment) and the second black woman to receive a doctorate in applied mathematics at Harvard. Mack claims that soon after she started working at Harvard Management, in early 2002—after a stint at Enron—she became uncomfortable with the lack of understanding she thought her colleagues had with the risky derivatives they were investing in. (She was proved correct in the past fiscal year, when the endowment dropped 27.3 percent.) On May 12, 2002, she wrote an e-mail to Summers, alerting him to her concerns: “As a proud Harvard alum I am deeply troubled and surprised by what I have been exposed to thus far at HMC, and the potential consequences for my alma mater’s endowment. In addition, I strongly believe that if my fellow alum[s] knew how the endowment is being managed and the caliber of some of the portfolio managers, they probably would not give another dime to our endowment.”
View Vanity Fair’s Obama White House Portfolio, photographed by Annie Leibovitz.

She asked Summers for a meeting and that he keep the correspondence between them confidential, “especially due to th[e] fact that several individuals have been terminated from HMC when they raised concerns about such issues.” Nine days later, Mack got an e-mail from Marne Levine, Summers’s chief of staff at Harvard (and now his chief of staff at the National Economic Council), asking Mack to contact her and assuring her that the initial e-mail “remains confidential.”
But not for long. A month later, she was confronted by Jack Meyer, then head of H.M.C., who had copies of her correspondence with Summers and Levine. Meyer fired her the next day. She has since reached a confidential settlement with Harvard that she won’t discuss. But she is unequivocal about one thing. “I would say that there is 99.9999999999999999 percent probability that Summers had a hand in my departure,” she wrote me in an e-mail. (Summers replies he had nothing to do with her firing and could not, because she did not work for or report to him. “[Mack’s] allegations were the subject of thorough internal and external reviews and found to be without merit,” says a Harvard spokesman.)
Much has been made of how Rubin has helped Summers sand down his sharp elbows. Rubin deflects questions about any such role, pointing instead to Summers’s ability to summarize quickly and articulately a variety of complex policies for important people. He saw Summers do this for Senator Obama repeatedly during the summer of 2008. “He wasn’t good,” Rubin says of Summers. “He was terrific. I think what [Obama] saw in Larry is what so many people have seen in Larry: not just a very bright guy, but a guy who sees many different dimensions of issues, sees the competing points of view, can hold the competing points of view in his head at the same time, will keep sort of relentlessly searching to see if there’s some better way of looking at something. And I know what Obama saw because he was talking to me about it. And he wanted that in his White House.”
Summers is quick to acknowledge all that Rubin has done for him, and he is impressed especially with Rubin’s ability to get colleagues to consider why a course of action should not be pursued, even as they were advocating for that course of action. “I now do that routinely,” Summers says. “I learned something about the importance of making everybody feel comfortable speaking up with a view, and sort of watched the way he created a culture of decision-making. I think I’ve had to learn that not everybody feels as free speaking up as I might have when I was young. And so you have to be conscious of creating an environment where people feel comfortable in disagreeing with me.” He says his new wife has “mellowed” him as well. “Being married to a student of poetry may not have me smelling the flowers, but it may have me ignoring them a little less,” he says.
And yet the stories of Summers’s impatience and bullying persist. A June 2009 front-page New York Times article referred to Summers as both “brilliant” and “supercilious” and cited run-ins he has had with Geithner, Orszag, Romer, and Goolsbee—the last over whether the government should participate in the bailout of Chrysler. According to the article, Summers got so upset during a clash with Goolsbee that he “stormed from” the meeting and then excluded Goolsbee from the subsequent meeting with the president, although he did include Goolsbee’s argument in a memo prepared for Obama. But those who know Summers best believe these stories badly misrepresent the man. Summers just wants to do the right thing in any given situation, they say, and uses his debating skills and Socratic methods to try to elicit the best solutions from his colleagues. “He’s one of the best listeners I’ve ever known,” says Rubin. “But if you only see him once a month or once a year or whatever, you may see the challenging side and not realize that what really is going on is just a part of his style.”
Sheryl Sandberg, the chief operating officer of Facebook, was Summers’s chief of staff for four years at the Treasury Department and also worked for him at the World Bank. She, too, thinks Summers has been unfairly criticized over the years. “I think his directness is a huge asset,” she says. “You always know exactly where you stand with Larry. He pulls no punches. He does nothing behind your back. He literally tells you to your face, if you are working for him and if he thinks you did a great job, he says, ‘You did a great job.’ If he thinks you did a bad job, he says, ‘Try harder and let me help you try harder. I don’t think you quite understood what you needed to do here. Let me help you.’?”
Nowhere has Summers been more thoroughly misunderstood, Sandberg believes, than after his infamous speech about women and science. “What few seem to note is that it is remarkable that he was giving the speech in the first place—that he cared enough about women’s careers and their trajectory in the fields of math and science to proactively analyze the issues and talk about what was going wrong,” she wrote on the Huffington Post. “To conclude that he communicated poorly—and even insensitively—is fair. To conclude that he is opposed to progress for women overlooks the fact that improving this progress was precisely the subject he was addressing.”
But not everyone in Summers’s high-powered circle thinks he is misunderstood. For instance, Tim Geithner, the Treasury secretary: “Larry has not had the jobs he’s had because he’s misunderstood. He’s had them because some of the best leaders in our country understand quite well how much he has to offer.”
http://www.vanityfair.com/politics/featu...rentPage=1

[Magda Hassan]

Summers Hated in Russia
For His 1990s Record

by Rachel Berthoff Douglas
[PDF version of this article]
April 3—Academician Sergei Glazyev's book Genocide: Russia and the New World Order (English edition, EIR: 1999) documented the devastation of living standards and industrial capacity in Russia during the 1990s, under the liberal reforms implemented during the Presidency of Boris Yeltsin. While nailing the role of the International Monetary Fund in that process, Glazyev mentioned few names of individuals. After all, the book was written only five years after Yeltsin deployed the Russian Army to crush the elected Russian Parliament, which had resisted the IMF-mandated privatization policy.
A notable exception was Larry Summers, who today heads President Obama's National Economic Council. Glazyev wrote about the August 1998 collapse of the Russian short-term government bond (GKO) pyramid: "Evidence indicates that the decisions on declaring the Russian financial and banking system bankrupt on August 17 were coordinated beforehand with U.S. Deputy Treasury Secretary Lawrence Summers and IMF Deputy Managing Director Stanley Fischer.... The coordination was carried out on behalf of the Russian leadership by Mr. Anatoli Chubais, who is known not only for his destructive activity in the realm of privatization, but also as a successful player on the government securities market."
The Harvard Project

The association of Summers with corruption is well known in Russia because of the USAID/Harvard project, under which Harvard's Prof. Andrei Shleifer, a Summers intimate, was advising the Russian government on privatization, while his wife and the girlfriend of an associate were running a hedge fund out of the back room of the Harvard Institute for International Development (HIID) office in Moscow. Harvard settled a U.S. Department of Justice suit against the university for the scam, paying penalties of $26 million, while Shleifer personally paid $2 million in damages.
Larry Summers defended his friend Shleifer throughout the HIID case. Shleifer kept his tenured position at Harvard, where Summers was president in 2001-06. What's more, Summers did not think Shleifer should have been removed even from the HIID project itself. In a court deposition, highlighted by the Boston Globe of June 29, 2002, Summers stated that the removal of Shleifer and his assistant, Jonathan Hay, from the Russia project in 1997 had compromised the U.S. government's strategic aims in Russia. He added that Russian officials had bitterly complained to him, as a U.S. Treasury official, that the DOJ investigation of the Harvard program "had hampered their efforts to build a free-market economy in Russia."
Indeed, the HIID caper was far from being a good program gone bad. As EIR reported in our issue of Oct. 13, 2000 ("DOJ Sues Harvard Over Russia-USAID Scam"), HIID was an outgrowth of a series of 1991 meetings held by Harvard's Prof. Jeffrey Sachs and other Western economists, such as Anders Aslund, with a group of Russian "reformers," including Anatoli Chubais and Yegor Gaidar. The latter were part of a group of young Russian economists, recruited in the 1980s by the London-based Institute for Economic Affairs (IEA), a center for radical Mont Pelerin Society free-market ideology. With funding from George Soros's Open Society Institute, among others, members of this group of radical neo-liberals were groomed for leadership positions in the Soviet Union, which was then undergoing Mikhail Gorbachov's perestroika reforms.
When the U.S.S.R. broke up in 1991, IEA Director Ralph Harris (the late Lord Harris of High Cross) gloated, "We criticized Gorbachov in the past for not reforming fast enough. Now the pace will be accelerated and our think-tanks can play a key role." The Times of London, reporting on the Harris group's plans, wrote in August 1991 that "the Thatcherites believe that the events of the last few days [in Russia] have created the perfect new laboratory to test their ideas." (See "Russian 'Reform' Cadre Trained by London," EIR, Aug. 14, 1998.)
Under Mont Pelerin Society doctrine, the criminal sector is viewed as one of the most generative parts of an economy. As Lyndon LaRouche told a Russian interviewer in 1993, "The way it's recommended in, say, Bolivia, Peru, and so forth, the Harvard Group in particular who have recommended this, [Jeffrey] Sachs's teachers, openly admit that organized crime is an integral part of their chaos process, which they say leads to the kind of capitalist economy they want to create." ("Criminality Was the Policy In Russian Reform," EIR, Sept. 3, 1999.)
Gaidar became prime minister at the end of 1991. Chubais, in charge of privatization, oversaw the "loans-for-shares" maneuvers of the 1990s, through which major industries came into the hands of upstart financial artists, soon to be known as "the oligarchs." The crash deregulation they implemented was known as "shock therapy." The HIID, the International Monetary Fund, and Larry Summers's U.S. Treasury Department were with them every step of the way.
The legacy of the 1990s is still with Russia today, not only in the bitter taste left by the bond collapse, default, and devaluation of 1998, in which the Harvard-Mont Pelerin policies culminated, but in the persistent influence of the personnel involved. The fact that Vladimir Mau, liaison between Lord Harris's IEA and the Gaidar government through Harris's International Center for Research into Economic Transformation (ICRET) and his own Institute for the Economy in Transition, today heads the expert council of First Vice-Premier Igor Shuvalov's government crisis-management commission, sheds light on Moscow's inability to break with the flawed axioms underlying the global systemic crisis.
Summers and the Young Reformers

Thus, the HIID scandal was but one lurid episode in the track record, racked up by Summers and Stanley Fischer in Russia throughout most of the 1990s. The appointment of Summers to his current position has contributed to a high level of skepticism about the Obama Administration in that country—except, of course, on the part of such officials as Finance Minister Alexei Kudrin, who comes from the same international clique as Mau, Gaidar, Chubais, and Summers.
Summers cut his teeth in the Soviet Union and post-Soviet region as a young Harvard hot-shot in 1990. He became the leading economic reform advisor to the government of Lithuania, which declared its independence from the U.S.S.R. that year. Typical of Summers's advice, the International Herald Tribune reported in March 1990, was that Lithuania should promote cheap labor, as a competitive advantage under globalization. "Lithuania's educated work force can produce to high standards and work for wages lower than those now paid by South Korea," he said.
According to the IHT, Summers was pushing Lithuania to accept a decade of austerity. "Over a decade, he foresaw a transition period in which Lithuanians tightened their belts and accepted lower living standards." As recalled by Mark Ames in a Nov. 10, 2008 article in The Nation, pleading against an appointment of Summers to the Obama Administration, the suicide rate doubled in Lithuania while Summers was its economic advisor, and the population voted the Communist Party back into power after two years.
In 1993-94, the degree of Summers's dictatorial behavior toward Russia itself began to leak out. A March 1993 Evans †Novak column pointed out that World Bank-IMF demands for Russia to bring internal prices to world market levels had been a factor in the previous year's inflation rate of more than 2,000%. Lawrence Summers, then Treasury Undersecretary-designate, was supporting this demand for oil prices, in particular.
Most remarkable were Summers's Russian interventions in January 1994. That was only three months after Yeltsin's military crushing of the elected Parliament, which had resisted the latest round of privatization and other economic liberalization measures. It was one month after the December 1993 State Duma election, in which the large vote for Vladimir Zhirinovsky's nationalist party expressed the population's rage about those events and their own plunging standard of living.
President Bill Clinton's top Russia advisor, then Deputy Secretary of State-designate Strobe Talbott, had stated that Russia needed "less shock, more therapy"—an implicit rejection of the horrific Mont Pelerin and IMF liberalization-privatization model.
But on Jan. 3, 1994, Treasury Undersecretary Summers addressed the American Economics Association in Boston. He said, according to press reports at the time, that it would be "a grave mistake, and not one that anyone in the U.S. government intends to make," to think that there might be some sort of "third way for dealing with Russian aid—a way that would make for painless reforms." Summers lied, "There is no viable alternative to the hard work of economic stabilization"—code language for IMF structural reform conditionalities. And aid, he said, should be used to mitigate the consequences, "the dislocations that are inevitably associated with reforms."
That same month, a "highly unusual joint staff note" was written by the IMF and World Bank, having been discussed and cleared, as the Wall Street Journal-Europe reported at the time, with Summers. Here some of the "reform and stabilization dislocations" were spelled out. According to the note, the Russian government had continued too many subsidies and credits to existing industry ("producer vested interests," the memo called it). The memo denounced Russia for failure to reduce inflation according to the standard monetarist formula. The Summers-IMF-World Bank memo further demanded that Russia "speed up the transition to the market economy." In a defense of the document after it was leaked, the IMF claimed that the hardships experienced in Russia were not caused by Yeltsin's shock therapy reforms, but by the collapse of the Soviet Union per se.
Commenting on a (not necessarily accurate) New York Times account of disputes within the Clinton Administration, a spokesman in Summers's office at Treasury told EIR on Jan. 11, 1994, "Everyone here, including Larry, is very happy that the New York Times suggested President Clinton sided with him, rather than Strobe Talbott's 'less shock, more therapy.' "
On the same wavelength as Summers at that time was Chubais, then head of the State Committee on Privatization. Three years later, when Chubais had been brought in as first deputy prime minister, came the next Summers scandal in Russia, namely, the leak of a "Dear Anatoli" letter he wrote to Chubais, which revealed the degree of their intimacy, as well as Summers's high-handed attitude toward Russia. As published in Nezavisimaya Gazeta in September 1997, the Summers letter ordered Chubais to focus on certain tax reforms ("in such a way that the competitiveness of Western products would be enhanced," according to the report), on pushing through Production Sharing Agreements (PSA) to give foreign investors more ownership rights over Russian raw materials, and on Russia's joining the World Trade Organization.
In mid-1996, with the friends of Summers and the IMF in positions of influence under the just-reelected President Yeltsin and the Victor Chernomyrdin government, the Russian short-term government bond (GKO) market was opened up to foreign investors. The rapid inflation of the GKO bubble, which would blow out in August 1998, was under way. When that happened, Larry Summers was on the case.
About the events of Summer 1998, there are numerous accounts of Summers's hands-on role, in addition to Glazyev's. In a December 1999 article in the Moscow Tribune, Prof. Stanislav Menshikov recounted a confrontation he had had with Summers at a World Bank seminar in 1998. Referring to certain factional developments within the IMF and World Bank, Menshikov observed, "Summers's victory led to the further tightening of the screws on IMF policies towards Russia." There had even been a personal pledge by President Clinton for the release of a certain tranche of an IMF loan to Russia. "But," recalled Menshikov, "the President of the United States was overruled by the powerful group in Washington that is behind Summers and other architects of hard-line policies vis-à-vis Russia."

http://www.larouchepub.com/other/2009/36...hated.html

[Magda Hassan]

Questions about Larry Summers & Harvard Endowment

Catherine and News & Commentary,
December 2, 2009 at 3:12 pm


Derivatives have many purposes. One is to quietly launder the profits out of one place into another without the niceties of legal authorizations and documents. Everything is hidden behind the pricing of powerfully complex and obscure arrangements.
Vanity Fair’s latest piece on Larry Summers,” Endless Summers” has me wondering about Harvard’s derivatives operation.
Is Harvard’s endowment really in trouble (“Harvard Ignored Warnings About Investments“) or were gains simply transferred to the wider network for safe keeping?
After Summers left Harvard, where as President he was actively involved in Endowment management, he landed a part-time job working one day a week for a D.E. Shaw, a Wall Street hedge fund known for the complexity of its trading operation. His annual compensation? $100,000 per day or $5.2 MM. And Goldman Sachs paid him $135,000 for one speech.
Was this compensation or, well…um, payback?

Excerpt from “Endless Summers”:
There were also charges of betrayal from Iris Mack, a former derivatives specialist at the Harvard Management Company (responsible for investing Harvard’s endowment) and the second black woman to receive a doctorate in applied mathematics at Harvard. Mack claims that soon after she started working at Harvard Management, in early 2002—after a stint at Enron—she became uncomfortable with the lack of understanding she thought her colleagues had with the risky derivatives they were investing in. (She was proved correct in the past fiscal year, when the endowment dropped 27.3 percent.) On May 12, 2002, she wrote an e-mail to Summers, alerting him to her concerns: “As a proud Harvard alum I am deeply troubled and surprised by what I have been exposed to thus far at HMC, and the potential consequences for my alma mater’s endowment. In addition, I strongly believe that if my fellow alum[s] knew how the endowment is being managed and the caliber of some of the portfolio managers, they probably would not give another dime to our endowment.”
She asked Summers for a meeting and that he keep the correspondence between them confidential, “especially due to the fact that several individuals have been terminated from HMC when they raised concerns about such issues.” Nine days later, Mack got an e-mail from Marne Levine, Summers’s chief of staff at Harvard (and now his chief of staff at the National Economic Council), asking Mack to contact her and assuring her that the initial e-mail “remains confidential.”
But not for long. A month later, she was confronted by Jack Meyer, then head of H.M.C., who had copies of her correspondence with Summers and Levine. Meyer fired her the next day. She has since reached a confidential settlement with Harvard that she won’t discuss. But she is unequivocal about one thing. “I would say that there is 99.9999999999999999 percent probability that Summers had a hand in my departure,” she wrote me in an e-mail. (Summers replies he had nothing to do with her firing and could not, because she did not work for or report to him. “[Mack’s] allegations were the subject of thorough internal and external reviews and found to be without merit,” says a Harvard spokesman.)
http://solari.com/blog/?p=5275