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Lawrence Summers

Assumed office 
20 January 2009
Deputy Diana Farrell
Jason Furman
Preceded by Keith Hennessey

In office
1 July 2001 – 30 June 2006
Preceded by Neil L. Rudenstine
Succeeded by Drew Gilpin Faust
Derek Bok (acting)

In office
2 July 1999 – 20 January 2001
Preceded by Robert Rubin
Succeeded by Paul H. O'Neill

Born November 30, 1954 (1954-11-30) (age 55)
New Haven, Connecticut
Nationality American
Political party Democratic
Spouse(s) Elisa New
Children 3
Alma mater Massachusetts Institute of Technology
Harvard University
Profession Academic, economist
Religion Judaism
"There is no financial institution that exists today that is not the direct or indirect beneficiary of trillions of dollars of taxpayer support for the financial system"
— Larry Summers, Oct. 16, 2009[1]

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.



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. Cutting the capital gains tax rate, Summers found, could help the economy grow. 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. 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

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. 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][17]

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.[18]

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.[19] 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.[20]

Summers began[21] 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.[21]

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".[21]

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."[21] Nancy Hopkins, a professor of biology at MIT, walked out during the talk in disgust.[22] Summers' lunch-time talk drew accusations of sexism and careless scholarship, and an intense negative response followed, both nationally and at Harvard.[22] Summers apologized repeatedly, and Slate's William Saletan[23] , 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.[24]

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."[25]

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.[26]

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."[27][28]

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.[29] 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.[30] 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.[31] 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.[32]

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.[33] He also joined the D. E. Shaw Group in October 2006 as a part-time managing director.[34] Summers also has been authoring a column for the Financial Times.[35]

Post-Harvard career

President Barack Obama, on left, discusses with a group in the White House, including Larry Summers on far right (back to camera)

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.[36]

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."[37]

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." [38] But, given Summers' role in shooting down the CFTC Concept Release on the derivatives market in May 1998, his subsequent role in the deregulation of the derivatives market, and his current position within the White House it appears that Summers does have such a position. [39] [40]

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][41] 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.[42] 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."[43]

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."[44] DeFazio, along with liberal economists including Paul Krugman and Joseph Stiglitz, has argued that more of the stimulus should be spent on infrastructure,[45] while Summers has supported tax cuts.

Summers has recently come under fire for accepting perks from Citigroup, including free rides on its corporate jet in 2008.[46] According to the Wall Street Journal, Larry Summers called Chris Dodd asking him to remove caps on executive pay at firms that have received stimulus money, including Citigroup.[47]

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.[48]



  1. ^ Tapper, Jake. "Summers Says Financial System That Causes One Crisis Every Three Years Demands Reforms", ABC News, October 16, 2009
  2. ^ a b (November 24, 2008). "Geithner, Summers among key economic team members announced today" (Official website). Newsroom. Office of the President-elect. 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.  
  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.  
  10. ^ Blustein, Paul (2001). "'The Chastening'". Public Affairs, New York. p. 232.  
  11. ^ Aides Say Clinton Would Veto Tax Compromise. The Washington Post. July 26, 1999.
  12. ^ Krugman, Paul. "California Energy Memories". The New York Times.  
  13. ^ Gibney, Alex. "Larry Summers' Enron Problem". The Daily Beast.  
  14. ^ a b Labaton, Stephen (November 5, 1999). "Congress Passes Wide Ranging Law Repealing Bank laws". New York Times. Retrieved March 25, 2009.  
  15. ^ "Ten Questions for Those Fixing the Financial Mess". Wall Street Journal. March 10, 2009. Retrieved March 26, 2009.  
  16. ^ "the warning". Frontline/PBS. October 23, 2009. Retrieved October 26, 2009.  
  17. ^ "Monetary Policy, Credit Extension, and Housing Bubbles, pp. 285-87". Paper/CriticalReview. July 2009. Retrieved December 16, 2009.  
  18. ^ Harvard’s First Jewish President. The Harvard Crimson. March 8, 2006
  19. ^ "Some seek a scholar's return". The Boston Globe. June 6, 2006.  
  20. ^
  21. ^ a b c d Archive of: Remarks at NBER Conference on Diversifying the Science & Engineering Workforce. January 14, 2005.
  22. ^ a b Summer's Remarks on Women Draw Fire. The Boston Globe. January 17, 2005
  23. ^ Saletan, William. "Don't Worry Your Pretty Little Head", Slate, January 21, 2005.
  24. ^ Summers' 'sexism' costs him top Treasury job. The Independent. November 24, 2008
  25. ^ Psychoanalysis Q-and-A: Steven Pinker. The Harvard Crimson. January 19, 2005
  26. ^ Poll: Students Say Summers Should Stay. The Harvard Crimson. February 20, 2006
  27. ^ A Harvard Governor, Dissatisfied, Resigns July 29, 2005
  28. ^ Board Member's Letter of Resignation. The New York Times. August 2, 2005
  29. ^ ‘Tawdry Shleifer Affair’ Stokes Faculty Anger Toward Summers. The Harvard Crimson. February 10, 2006
  30. ^ Quint, Michael; Gillian Wee (2009-03-03). "Harvard Losing AAA Benefit in Market Shows Swap Risk". Retrieved 2009-07-24.  
  31. ^ Munk, Nina (2009-08). "Rich Harvard, Poor Harvard". Vanity Fair (Conde Nast). Retrieved 2009-07-24.  
  32. ^ Salmon, Felix (2009-07-24). "Larry Summers’s billion-dollar Harvard gamble". Retrieved 2009-07-24.  
  33. ^ Schuker, Daniel J. T. (July 7, 2006). "Summers Named Eliot Univ. Prof". The Harvard Crimson.  
  34. ^ Burton, Katherine (October 19, 2006). "Summers, Former Treasury Secretary, Joins D.E. Shaw". Bloomberg.  
  35. ^ Lawrence Summers, Columist as Financial Times.
  36. ^
  37. ^ Summers, Larry (November 19, 2006). "The Great Liberator". The New York Times.  
  38. ^ Leonhardt, David (November 25, 2008). "The Return of Larry Summers". The New York Times.  
  39. ^ Summers, Lawrence (July 30, 1998). "Lawrence H. Summers Testimony".  
  40. ^ U.S. Commodity Futures Trading Commission (May 7, 1998).  
  41. ^ Bohan, Caren (November 24, 2008). "Obama taps Geithner, Summers". U.S. News (Reuters). Retrieved November 24, 2008.  
  42. ^ Schmidt, Robert; Julianna Goldman (February 5, 2009). = "Volcker Chafes at Obama Panel Delay, Strains With Summers Rise". Bloomberg. =.  
  43. ^
  44. ^ DeFazio, Peter; Video Interview (January 2008). "DeFazio Slams Summers".  
  45. ^ Krugman, Paul (January 6, 2009). "Stimulus Arithmetic (wonkish but important)". The New York Times.  
  46. ^ Fitzgerald, Jay (February 11, 2009). = "Larry Summers Jet Ride Called Part of Larger Problem". Boston Herald. =.  
  47. ^ Soloman, Deborah; Mark Maremont (February 14-15, 2009). [= "Bankers Face Strict Pay Cap"]. Wall Street Journal. pp. 1, above the fold. =.  
  48. ^ Zeleny, Jeff (April 3, 2009). "Financial Industry Paid Millions to Obama Aide". The New York Times. Retrieved April 4, 2009.  

External links

Business positions
Preceded by
Stanley Fischer
World Bank Chief Economist
Succeeded by
Michael Bruno
Political offices
Preceded by
Robert Rubin
United States Secretary of the Treasury
Served under: Bill Clinton

Succeeded by
Paul O'Neill
Government offices
Preceded by
Keith Hennessey
Director of the National Economic Council
January 20, 2009
Succeeded by
Academic offices
Preceded by
Neil L. Rudenstine
President of Harvard University
Succeeded by
Drew Gilpin Faust


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