While former Obama administration officials describe the relationship with different metaphors, they concur that Lawrence Summers won the trust of President Barack Obama in the crisis-fighting days of early 2009.
Summers, then director of the National Economic Council and now a top candidate to be the next Federal Reserve chairman, was especially instrumental in Obama’s decision to bail out Chrysler. It turned out to be a good call for Obama: U.S. sales at the automaker, now called Chrysler Group LLC, have increased for 40 consecutive months. Government rescues of Chrysler and General Motors Co. boosted the economies of Michigan and Ohio, and helped Obama win those states in the 2012 presidential election.
“The president had enormous respect for Larry’s judgment on this stuff,” Steven Rattner, who led the White House auto task force, said in an interview. Obama made his own decision and required that Summers defend his positions, but “when Larry spoke — like in the old E.F. Hutton commercial — everybody listens. Including the president.”
One former administration official compared Obama’s confidence in Summers to that of a patient for a doctor who helped him survive a heart attack. Another used a military analogy, saying Obama sees Summers the way a soldier views a trench mate during a battle. Either way, the point is that early 2009 was a scary time for the economy and the Obama economic team, and there’s a special bond among those who worked together on the rescue effort.
“The financial sector was really teetering on the edge,” said Michael Barr, who was then the Treasury’s assistant secretary for financial institutions. Summers, along with then-Treasury Secretary Timothy F. Geithner were “at the center” of the crisis-fighting efforts, Barr said.
Summers, Fed Vice Chairman Janet Yellen and former Fed Vice Chairman Donald Kohn have been mentioned by Obama as candidates for the central bank post when Ben S. Bernanke’s term expires at the end of January.