Summers’ opponents are doing their best to be heard before Obama makes his pick. Momentum builds against Summers

The opposition among Democrats to Larry Summers as the next Federal Reserve chairman grew on Friday when Sen. Jon Tester announced he would vote against the former Obama economic adviser if he is nominated for the post.

President Barack Obama has yet to announce whom he will nominate to replace Fed Chairman Ben Bernanke, whose term ends Jan. 31, but Summers’ opponents are doing their best to be heard.


Tester (D-Mont.) opposes Summers because of concerns about the role he played in easing financial regulations during the Clinton administration, when he served as Treasury secretary, according to his office.

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“Sen. Tester believes we need a consensus builder to lead the Federal Reserve,” spokeswoman Andrea Helling said in a statement Friday. “He’s concerned about Mr. Summers’ history of helping to deregulate financial markets. The senator thinks it is vital to have a chair who appreciates the important role small community lending institutions play in financial markets.”

The White House is still said to favor Summers — who led Obama’s National Economic Council — over Federal Reserve Vice Chairwoman Janet Yellen, whom liberal Democrats and reform advocates have endorsed. But several people close to the situation said no final decision has been made, and Obama could still choose to nominate Yellen or a dark horse pick.

Senate aides expect as many as three other Democrats on the Banking Committee to oppose Summers — Sens. Jeff Merkley (D-Ore.), Sherrod Brown (D-Ohio) and Elizabeth Warren (D-Mass.) — although they have not publicly declared how they will vote.

( Cartoons: Larry Summers possible Fed nomination)

A Merkley aide said today that the senator is expected to vote against Summers if he is nominated, and would support Yellen. An aide to Brown said he is likely to oppose Summers.

The Banking Committee has 12 Democrats and 10 Republicans, which means that for the panel to report Summers’ nomination favorably to the full Senate, a Republican “yes” vote would be needed for every Democrat who votes “no.”

“If they are hell-bent on nominating Summers, this is another vote they’re going to have to pick up from Republicans,” an aide to a pro-Yellen senator said after Tester’s announcement. “I think Yellen would have a much easier go of it than Larry Summers.”

Some media reports Friday said the selection could come as early as next week, around the time that the Fed’s policy-setting committee holds its meeting on interest rates. But people close to the White House said that was unlikely, as the situation is highly fluid and could change at any time.

“The people who know are not talking and the people who don’t really know are,” said one person close to the Fed selection process.

A group of 16 Democrats sent a letter to the White House last month urging the president to nominate Yellen, touting her experience as a banking regulator, and her prescience in identifying the “impending threats” from the housing bubble and risks in the shadow banking market during her time as president of the San Francisco Federal Reserve Bank.

Summers’ supporters argue that he is a brilliant economist who is well-suited to lead the Fed and that he was a forceful advocate for the 2010 Dodd-Frank financial reform law, pushing back against the idea that he would not be a tough regulator of Wall Street.

It’s not clear that the White House would get the help it needs from the GOP if they decide to go with Summers.

Several Republican senators said this week they were inclined to sit back and watch the drama unfold among the committee Democrats and would not say whether they would support Summers or Yellen to be the next Fed chairman.

”There’s a little bit of spectator sport in this current circumstance,” Sen. Jerry Moran (R-Kan.) said. “It’s given me as a Republican the opportunity to take a step back without the necessity of trying to form an opinion about any of the potential candidates.”

Outside the Banking Committee, either Summers or Yellen will face opposition from Fed-weary Republicans, who take issue with the central bank’s role in the economy. Tea party advocacy group American Principles Project, for instance, is prepping a $25,000 online ad buy to rally against either of Obama’s nominees.

That puts even more emphasis on each Democratic vote. Sen. Mark Begich (D-Alaska) told POLITICO last month that he would oppose Summers. He did not take issue with Yellen.

Begich’s remarks were significant because he is among the handful of Senate Democrats expected to face a tough reelection in 2014. And it illustrates how Democrats might be wary of alienating their progressive base, many of whom are lobbying heavily against Summers.

Next week, progressive groups are preparing to increase their lobbying efforts against Summers. The National Organization for Women and UltraViolet are expected to release a letter signed by women in the financial services industry who support Yellen and are against Summers, in part for the controversial remarks he made in 2005 while president of Harvard University. The remarks, in part, led to his resignation in 2006.

Meanwhile, progressive groups like MoveOn.org, CREDO Action, Public Citizen and the Campaign For America’s future are also expected to release petitions and flood Banking Committee members’ offices with phone calls and fliers in opposition to Summers. In addition to attacking his policies — which they say contributed to the 2008 collapse — they also have criticized him personally, as well as for work he’s done for Wall Street firms.

“The president needs to know that Summers could lose on the Banking Committee, so why do that? It makes no sense at all,” CREDO President and CEO Michael Kieschnick told POLITICO.

Ben White contributed to this report.