Potential Paulson Successors #1: Larry “Hot” Summers

Hank Paulson didn’t want to carry on being Treasury Secretary back in August, so he sure as hell won’t want to now.

But when Paulson departs, who’s going to fill his clumsy shoes? The FT makes a good point today that “the eventual choice may be one that transcends politics”. The American people will just want the best person for the job, and with Obama mooting Powell as a member of his circle it seems that party lines are being blurred in the quest for change. Over this week we’ll have a look at the different potential candidates for the position.

New York Magazine suggests that if Obama wins, it’ll be Larry Summers, who held the post once before at the end of the Clinton administration. In terms of recent events, Summers expressed his support for the bailout plan, saying that “for the near term, government should do more, not less” – in America, this is still pinko commie claptrap to many people. It’s certainly more upbeat than Paulson saying, as he did when announcing the bailout: “Government owning a stake in any private U.S. company is objectionable to most Americans – me included”.

Interestingly, Summers suggests “investments in healthcare restructuring” as being a Keynesian path to economic rehabilitation. It doesn’t get much more Clinton than that; could nationalised health-care finally become legitimised in the eyes of the American public, as a way of spending the US out of financial turmoil?

So what else has Summers got up to? Well, he was tenured at Harvard aged just 28, eventually becoming president of the university in 2001. Since then he’s also become part-time managing director of D.E. Shaw, which is a technology-focused hedge fund, private equity and sometime venture capital company. Apparently they specialise in “investing in bankrupt companies with valuable assets”; presumably Summers will have to adapt to investing in non-bankrupt companies with unvaluable assets if he takes the Treasury position.

There are probable points against him, though, for his various beefs while at Harvard. He told Harvard’s African-American studies professor Cornel West to start taking his academic role more seriously after West made a rap record; West defected to Princeton over the ensuing row, nearly taking various other African-American studies professors with him. He also made comments highlighting reasons for why there should be fewer female scientists working at the highest level than male – the whole debate is so deeply mired in context that it’s impossible to say what was really meant, but suffice to say he annoyed a lot of female scientists.

That said, his reputation for opening his mouth a little too widely shouldn’t harm his prospects that much. Instead what will matter is whether Obama values freshness and bipartisanship over Democratic loyalty and experience.

Posted by Ben Beaumont-Thomas in Hot Money | October 27, 2008 12:39PM |