Lawrence Summers
Overview
 
Lawrence Henry Summers is an American economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...

. He served as the 71st United States Secretary of the Treasury
United States Secretary of the Treasury
The Secretary of the Treasury of the United States is the head of the United States Department of the Treasury, which is concerned with financial and monetary matters, and, until 2003, also with some issues of national security and defense. This position in the Federal Government of the United...

 from 1999 to 2001 under President Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...

. He was Director of the White House United States National Economic Council for President Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...

 until November 2010.
Summers is the Charles W. Eliot University Professor at Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...

's Kennedy School of Government. He is the 1993 recipient of the John Bates Clark Medal
John Bates Clark Medal
The John Bates Clark Medal is awarded by the American Economic Association to "that American economist under the age of forty who is adjudged to have made a significant contribution to economic thought and knowledge"...

 for his work in several fields of economics.

Summers also served as the 27th President of Harvard University
President of Harvard University
The President of Harvard University is the chief administrator of the university. Ex officio the chairman of the Harvard Corporation, he or she is appointed by and is responsible to the other members of that body, who delegate to him or her the day-to-day running of the university...

 from 2001 to 2006.
Quotations

With uncertainty in oil markets, a buildup of speculative pressures and the large U.S. current account deficit, there is a real possibility that Paulson's crisis-management skills will be tested.

David Ignatius (May 31, 2006) "Watching the Yellow Flags", The Washington Post|The Washington Post, p. A19.

I know that there is one additional thing that I've learned and that is that what Harvard does and says has an enormous resonance that goes beyond Zip code 02138.

Philip Kennicott (April 15, 2005) "The Man in The Ivory Tower - Harvard's Lawrence Summers Is a Study in Controversy" The Washington Post|The Washington Post, p. C1.

I deeply regret the impact of my comments and apologise for not having weighed them more carefully ... I was wrong to have spoken in a way that has resulted in an unintended signal of discouragement to talented girls and women.

Apology letter addressed to Harvard University community, posted on his website — reported in Reuters|Reuters (January 26, 2005) "Summers Regrets", The Australian|The Australian, p. 032.

We must recognise that in an integrated world, trade cannot be divorced from other concerns. We need to promote free trade and serious global efforts with respect to common problems even as we support every nation's right to chart its own course.

Statement made at World Economic Forum|World Economic Forum — reported in Muihoong (February 1, 2000) "China trade vote a key test, says Summers", The Straits Times|The Straits Times, p. 9.

The situation in a number of countries reminds one that it's still a risky world out there in the emerging markets.

Michael M. Phillips, The Wall Street Journal|The Wall Street Journal (April 16, 1999) "Global Economic Crisis In Its Last Days", Pittsburgh Post-Gazette|Pittsburgh Post-Gazette, p. C-1.

Where countries have been able to carry through on their reform commitments -- as in Korea, Thailand and the Philippines -- results are starting to come in the form of lower interest rates, new investment and increased growth.

David Ignatius (April 12, 1999) "Clinton's Capitulation on China", The Washington Post|The Washington Post, p. A23.

No free country will ever again have anything like the 90 percent tax rates that we had in this country. Past a certain point, high marginal tax rates are, indeed, terribly destructive.

David Wessel, The Wall Street Journal|The Wall Street Journal (April 5, 1998) "Rich now pay more in taxes", Mobile Register|Mobile Register, p. F1.

Things take longer to happen than you think they will and then they happen faster than you think they will.

David Warsh (February 11, 1992) "Avoiding Weimar Russia", Boston Globe|Boston Globe, p. 37, Section: Business.

Takeovers wouldn't cause the stock market to rise unless there is an upward reassessment of earnings (potential). People are more optimistic and confident about the future.

Glenn Pascall (August 16, 1987) "Raiding Can Be Seen As Wake-Up Call For Corporate America", The Seattle Times|The Seattle Times, p. B4.

Encyclopedia
Lawrence Henry Summers is an American economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...

. He served as the 71st United States Secretary of the Treasury
United States Secretary of the Treasury
The Secretary of the Treasury of the United States is the head of the United States Department of the Treasury, which is concerned with financial and monetary matters, and, until 2003, also with some issues of national security and defense. This position in the Federal Government of the United...

 from 1999 to 2001 under President Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...

. He was Director of the White House United States National Economic Council for President Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...

 until November 2010.
Summers is the Charles W. Eliot University Professor at Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...

's Kennedy School of Government. He is the 1993 recipient of the John Bates Clark Medal
John Bates Clark Medal
The John Bates Clark Medal is awarded by the American Economic Association to "that American economist under the age of forty who is adjudged to have made a significant contribution to economic thought and knowledge"...

 for his work in several fields of economics.

Summers also served as the 27th President of Harvard University
President of Harvard University
The President of Harvard University is the chief administrator of the university. Ex officio the chairman of the Harvard Corporation, he or she is appointed by and is responsible to the other members of that body, who delegate to him or her the day-to-day running of the 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 large part from Summers's conflict with Cornel West
Cornel West
Cornel Ronald West is an American philosopher, author, critic, actor, civil rights activist and prominent member of the Democratic Socialists of America....

, financial conflict of interest
Conflict of interest
A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other....

 questions regarding his relationship with Andrei Shleifer
Andrei Shleifer
Andrei Shleifer is a Russian American economist. From its inauguration in 1992 until it was shut down in 1997, Shleifer served as project director of the Harvard Institute for International Developments Russian aid project...

, and a 2005 speech in which he suggested that the under-representation of women in science and engineering could be due to a "different availability of aptitude
Aptitude
An aptitude is an innate component of a competency to do a certain kind of work at a certain level. Aptitudes may be physical or mental...

 at the high end," and less to patterns of discrimination and socialization.

Summers has also been criticized for the economic policies he advocated as Treasury Secretary and in later writings. In 2009, he was tapped by President Obama to be the director of the White House National Economic Council.

Family and education

Summers was born in New Haven, Connecticut
New Haven, Connecticut
New Haven is the second-largest city in Connecticut and the sixth-largest in New England. According to the 2010 Census, New Haven's population increased by 5.0% between 2000 and 2010, a rate higher than that of the State of Connecticut, and higher than that of the state's five largest cities, and...

, on November 30, 1954, into a Jewish family, the son of two economists, Robert Summers
Robert Summers
Robert Summers is a U.S. economist and professor emeritus, University of Pennsylvania, where he taught from 1960. A widely cited early work by Summers is on the small-sample statistical properties of alternate regression estimators where analytical measures are unavailable.Summers received his...

 and Anita Summers
Anita Summers
Anita Arrow Summers is an American educator of public policy, management, real estate and education and is Professor Emerita at the University of Pennsylvania.The daughter of Jewish immigrants from Romania...

 of (Romanian-Jewish ancestry), who are both professors at the University of Pennsylvania
University of Pennsylvania
The University of Pennsylvania is a private, Ivy League university located in Philadelphia, Pennsylvania, United States. Penn is the fourth-oldest institution of higher education in the United States,Penn is the fourth-oldest using the founding dates claimed by each institution...

, as well as the nephew of two Nobel laureates in economics: Paul Samuelson
Paul Samuelson
Paul Anthony Samuelson was an American economist, and the first American to win the Nobel Memorial Prize in Economic Sciences. The Swedish Royal Academies stated, when awarding the prize, that he "has done more than any other contemporary economist to raise the level of scientific analysis in...

 (sibling of Robert Summers, who, following an older brother's example, changed the family name from Samuelson to Summers) and Kenneth Arrow
Kenneth Arrow
Kenneth Joseph Arrow is an American economist and joint winner of the Nobel Memorial Prize in Economics with John Hicks in 1972. To date, he is the youngest person to have received this award, at 51....

 (Anita Summers's brother). He spent most of his childhood in Penn Valley
Penn Valley, Pennsylvania
Penn Valley is a town in Lower Merion Township, Pennsylvania. Penn Valley residents share a zip code with either Narberth or Wynnewood because the town does not have its own post office. However, Penn Valley is its own distinct community with its own civic association.-Notable residents:*M...

, Pennsylvania
Pennsylvania
The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...

, a suburb of Philadelphia, where he attended Harriton High School
Harriton High School
Harriton High School is a public secondary school located in Rosemont, a community in Lower Merion Township, Pennsylvania.Harriton is one of two high schools in Lower Merion School District; the other is Lower Merion High School. It used to be a comparatively small high school, containing 889...

.

At age 16, he entered the Massachusetts Institute of Technology
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...

 (MIT), where he originally intended to study physics
Physics
Physics is a natural science that involves the study of matter and its motion through spacetime, along with related concepts such as energy and force. More broadly, it is the general analysis of nature, conducted in order to understand how the universe behaves.Physics is one of the oldest academic...

 but soon switched to economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 (S.B.
Bachelor of Science
A Bachelor of Science is an undergraduate academic degree awarded for completed courses that generally last three to five years .-Australia:In Australia, the BSc is a 3 year degree, offered from 1st year on...

, 1975). He was also an active member of the MIT debating team. He attended Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...

 as a graduate student (Ph.D.
Doctor of Philosophy
Doctor of Philosophy, abbreviated as Ph.D., PhD, D.Phil., or DPhil , in English-speaking countries, is a postgraduate academic degree awarded by universities...

, 1982). In 1983, at age 28, Summers became one of the youngest tenured professors in Harvard's history. It was also during this time that Summers was diagnosed with Hodgkin's lymphoma
Hodgkin's lymphoma
Hodgkin's lymphoma, previously known as Hodgkin's disease, is a type of lymphoma, which is a cancer originating from white blood cells called lymphocytes...

. He underwent treatment and has since remained cancer free. He was a visiting academic at the London School of Economics
London School of Economics
The London School of Economics and Political Science is a public research university specialised in the social sciences located in London, United Kingdom, and a constituent college of the federal University of London...

 in 1987. 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
Elisa New
Elisa New is a Professor of English at Harvard University. She holds a B.A. from Brandeis University , as well as a M.A. and a Ph.D from Columbia University . Her interests include American poetry, American Literature-1900, Religion and Literature, and Jewish literature...

, who has three daughters (Yael, Orli and Maya) from a previous marriage. He currently owns two houses, one in Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....

 and one in Brookline, Massachusetts
Brookline, Massachusetts
Brookline is a town in Norfolk County, Massachusetts, United States, which borders on the cities of Boston and Newton. As of the 2010 census, the population of the town was 58,732.-Etymology:...

.

Academic economist

As a researcher, Summers has made important contributions in many areas of economics, primarily public finance
Public finance
Public finance is the revenue and expenditure of public authoritiesThe purview of public finance is considered to be threefold: governmental effects on efficient allocation of resources, distribution of income, and macroeconomic stabilization.-Overview:The proper role of government provides a...

, labor economics, financial economics
Financial economics
Financial Economics is the branch of economics concerned with "the allocation and deployment of economic resources, both spatially and across time, in an uncertain environment"....

, and macroeconomics
Macroeconomics
Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...

. Some of Summers's early papers concluded that corporate and capital gains tax
Capital gains tax
A capital gains tax is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property...

es 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
Lobbying
Lobbying is the act of attempting to influence decisions made by officials in the government, most often legislators or members of regulatory agencies. Lobbying is done by various people or groups, from private-sector individuals or corporations, fellow legislators or government officials, or...

 successfully for cuts in both corporate and capital gains taxes. One of Summers's prominent findings in labor economics is that unemployment insurance and welfare payments are a major contributor to unemployment, and therefore should be scaled back.

Summers has also worked in international economics, economic demography, economic history
Economic history
Economic history is the study of economies or economic phenomena in the past. Analysis in economic history is undertaken using a combination of historical methods, statistical methods and by applying economic theory to historical situations and institutions...

 and development economics
Development economics
Development Economics is a branch of economics which deals with economic aspects of the development process in low-income countries. Its focus is not only on methods of promoting economic growth and structural change but also on improving the potential for the mass of the population, for example,...

. 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
John Bates Clark Medal
The John Bates Clark Medal is awarded by the American Economic Association to "that American economist under the age of forty who is adjudged to have made a significant contribution to economic thought and knowledge"...

 in 1993 from the American Economic Association. In 1987 he was the first social scientist to win the Alan T. Waterman Award
Alan T. Waterman Award
The Alan T. Waterman Award is the United States's highest honorary award for scientists no older than 35. It is awarded on a yearly basis by the National Science Foundation. In addition to the medal, the awardee receives a grant of $500,000 to be used for advanced scientific research at the...

 from the National Science Foundation
National Science Foundation
The National Science Foundation is a United States government agency that supports fundamental research and education in all the non-medical fields of science and engineering. Its medical counterpart is the National Institutes of Health...

. Summers is also a member of the National Academy of Sciences
United States National Academy of Sciences
The National Academy of Sciences is a corporation in the United States whose members serve pro bono as "advisers to the nation on science, engineering, and medicine." As a national academy, new members of the organization are elected annually by current members, based on their distinguished and...

.

Public official

Summers was on the staff of the Council of Economic Advisers
Council of Economic Advisers
The Council of Economic Advisers is an agency within the Executive Office of the President that advises the President of the United States on economic policy...

 under President Reagan in 1982–1983. He also served as an economic adviser to the Dukakis
Michael Dukakis
Michael Stanley Dukakis served as the 65th and 67th Governor of Massachusetts from 1975–1979 and from 1983–1991, and was the Democratic presidential nominee in 1988. He was born to Greek immigrants in Brookline, Massachusetts, also the birthplace of John F. Kennedy, and was the longest serving...

 Presidential campaign in 1988.

Chief Economist at the World Bank

Summers left Harvard in 1991 and served as Chief Economist
World Bank Chief Economist
The World Bank Chief Economist provides intellectual leadership and direction to the Bank’s overall development strategy and economic research agenda, at global, regional and country levels...

 for the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...

 until 1993.

As Chief Economist, Summers stated in a 1991 interview: “There are no... limits to the carrying capacity of the earth that are likely to bind any time in the foreseeable future. There isn't a risk of an apocalypse due to global warming or anything else. The idea that we should put limits on growth because of some natural limit, is a profound error and one that, were it ever to prove influential, would have staggering social costs.” This statement is regarded as highly controversial by ecologists and other sustainability
Sustainability
Sustainability is the capacity to endure. For humans, sustainability is the long-term maintenance of well being, which has environmental, economic, and social dimensions, and encompasses the concept of union, an interdependent relationship and mutual responsible position with all living and non...

 scientists.

"Dirty Industries" controversy

In December 1991, while at the World Bank, Summers signed a memo
Summers memo
The Summers memo was a 1991 memo on trade liberalization that was written by Lant Pritchett and signed by Lawrence Summers while the latter was Chief Economist of the World Bank...

 that was leaked to the press. Lant Pritchett
Lant Pritchett
-Biography:He was born in Utah in 1959 and raised in Boise, Idaho. He graduated from Brigham Young University in 1983 with a B.S. in Economics, after serving a mission for The Church of Jesus Christ of Latter-day Saints in Argentina...

 has claimed authorship of the private memo, which both he and Summers say was intended as sarcasm. The memo stated that "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."

Service in the Clinton Administration

In 1993 Summers was appointed Undersecretary for International Affairs and later in the United States Department of the Treasury
United States Department of the Treasury
The Department of the Treasury is an executive department and the treasury of the United States federal government. It was established by an Act of Congress in 1789 to manage government revenue...

 under the Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...

 Administration. In 1995, he was promoted to Deputy Secretary of the Treasury under his long-time political mentor Robert Rubin
Robert Rubin
Robert Edward Rubin served as the 70th United States Secretary of the Treasury during both the first and second Clinton administrations. Before his government service, he spent 26 years at Goldman Sachs eventually serving as a member of the Board, and Co-Chairman from 1990-1992...

. In 1999, he succeeded Rubin as Secretary of the Treasury
United States Secretary of the Treasury
The Secretary of the Treasury of the United States is the head of the United States Department of the Treasury, which is concerned with financial and monetary matters, and, until 2003, also with some issues of national security and defense. This position in the Federal Government of the United...

.

Much of Summers's tenure at the Treasury Department was focused on international economic issues. He was deeply involved in the Clinton administration's effort to bail out Mexico and Russia when those nations had currency crises.
Summers set up a project through which the Harvard Institute for International Development
Harvard Institute for International Development
The Harvard Institute for International Development was a think-tank dedicated to helping nations join the global economy, operating between 1974 and 2000...

 provided advice to the Russian government between 1992 and 1997. Later there was a scandal when it emerged that some of the Harvard project members had invested in Russia, and were therefore not impartial advisors.
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."

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
Paul Krugman
Paul Robin Krugman is an American economist, professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times...

 and Joseph Stiglitz. According to the book The Chastening, by Paul Blustein, during this crisis, Summers, along with Paul Wolfowitz
Paul Wolfowitz
Paul Dundes Wolfowitz is a former United States Ambassador to Indonesia, U.S. Deputy Secretary of Defense, President of the World Bank, and former dean of the Paul H. Nitze School of Advanced International Studies at Johns Hopkins University...

, pushed for regime change in Indonesia.

Summers was a leading voice within the Clinton Administration arguing against American leadership in greenhouse gas
Greenhouse gas
A greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...

 reductions and against US participation in the Kyoto Protocol
Kyoto Protocol
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change , aimed at fighting global warming...

, according to internal documents made public in 2009.

As Treasury Secretary, Summers led the Clinton Administration's opposition to tax cuts proposed by the Republican Congress in 1999. Also during his stint in the Clinton Administration, Summers was successful in pushing for capital gains tax cuts.
During the California energy crisis
Energy crisis
An energy crisis is any great bottleneck in the supply of energy resources to an economy. In popular literature though, it often refers to one of the energy sources used at a certain time and place, particularly those that supply national electricity grids or serve as fuel for vehicles...

 of 2000, then-Treasury Secretary Summers teamed with Alan Greenspan
Alan Greenspan
Alan Greenspan is an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006. He currently works as a private advisor and provides consulting for firms through his company, Greenspan Associates LLC...

 and Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...

 executive Kenneth Lay
Kenneth Lay
Kenneth Lee "Ken" Lay was an American businessman, best known for his role in the widely reported corruption scandal that led to the downfall of Enron Corporation. Lay and Enron became synonymous with corporate abuse and accounting fraud when the scandal broke in 2001...

 to lecture California Governor Gray Davis
Gray Davis
Joseph Graham "Gray" Davis, Jr. is an American Democratic politician who served as California's 37th Governor from 1999 until being recalled in 2003...

 on the causes of the crisis, explaining that the problem was excessive government regulation. Under the advice of Kenneth Lay, Summers urged Davis to relax California's environmental standards in order to reassure the markets.

Summers hailed the Gramm-Leach-Bliley Act
Gramm-Leach-Bliley Act
The Gramm–Leach–Bliley Act , also known as the Financial Services Modernization Act of 1999, is an act of the 106th United States Congress...

 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
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...

 and replace them with a system for the 21st century," Summers said. "This historic legislation will better enable American companies to compete in the new economy." Many critics, including President Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...

, have suggested the 2007 subprime mortgage financial crisis was caused by the partial repeal of the 1933 Glass–Steagall Act. Indeed, as a member of President Clinton's Working Group on Financial Markets
Working Group on Financial Markets
The Working Group on Financial Markets was created by Executive Order 12631, signed on March 18, 1988 by United States President Ronald Reagan.The Group was established explicitly in response to events in the financial markets surrounding October 19,...

, Summers, along with U.S. Securities and Exchange Commission (SEC) Chairman Arthur Levitt
Arthur Levitt
Arthur Levitt, Jr. was the twenty-fifth and longest-serving Chairman of the United States Securities and Exchange Commission from 1993 to 2001. Widely hailed as a champion of the individual investor, he has been criticized for not pushing for tougher accounting rules. Since May 2001 he has been...

, 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.

Summers's role in the deregulation of derivatives contracts

On May 7, 1998, the Commodity Futures Trading Commission
Commodity Futures Trading Commission
The U.S. Commodity Futures Trading Commission is an independent agency of the United States government that regulates futures and option markets....

 (CFTC) issued a Concept Release soliciting input from regulators, academics,
and practitioners to determine "how best to maintain adequate regulatory safeguards without
impairing the ability of the OTC (Over-the-counter
Over-the-counter (finance)
Within the derivatives markets, many products are traded through exchanges. An exchange has the benefit of facilitating liquidity and also mitigates all credit risk concerning the default of a member of the exchange. Products traded on the exchange must be well standardised to transparent trading....

) derivatives market to grow and the ability of U.S. entities
to remain competitive in the global financial marketplace."

On July 30, 1998, then-Deputy Secretary of the Treasury Summers testified before the U.S. Congress that "the parties to these kinds of contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies." Summers, like Greenspan and Rubin who also opposed the concept release, offered no proof that the contracts would not be misused by financial institutions. Instead, Summers stated that "to date there has been no clear evidence of a need for additional regulation of the institutional OTC derivatives market, and we would submit that proponents of such regulation must bear the burden of demonstrating that need."

In 1999 Summers endorsed the Gramm-Leach-Bliley Act which removed the separation between investment and commercial banks, saying "With this bill, the American financial system takes a major step forward towards the 21st Century."

The first response to the CFTC Concept Release was issued as a joint statement from Rubin, Alan Greenspan, and Arthur Levitt who stated that they "have grave concerns about this action and its possible consequences."

Levitt and Greenspan have admitted that their views on this issue were mistaken. Levitt told WGBH in Boston that "I could have done much better. I could have made a difference." Greenspan told a congressional hearing that "I found a flaw ... in the model that I perceived is the critical functioning structure that defines how the world works."
When George Stephanopoulos
George Stephanopoulos
George Robert Stephanopoulos is an American television journalist and a former political advisor.Stephanopoulos is most well known as the chief political correspondent for ABC News – the news division of the broadcast television network ABC – and a co-anchor of ABC News's morning news...

 asked Summers about the financial crisis in an ABC interview on March 15, 2009, Summers replied that "there are a lot of terrible things that have happened in the last eighteen months, but what's happened at A.I.G. ... the way it was not regulated, the way no one was watching ... is outrageous."

At the 2005 Federal Reserve conference in Jackson Hole, Raghuram Rajan presented a paper called "Has Financial Development Made the World Riskier?" Rajan pointed to a number of potential problems with the financial developments of the past thirty
years.
The problems that Rajan considers include skewed incentives of managers, herding
behavior among traders, investment bankers, and hedge fund operators who suffer
withdrawals if they under-perform the market. Rajan also discusses (on pp. 337–40)
the problems associated with firms that "goose up returns" by taking risky positions
that yield a "positive carry." This is how the infamous Joseph J. Cassano impressed
his superiors at A.I.G. for a decade while sowing the destruction of the firm.

During the boom years of the housing market, the credit default swap contracts
that A.I.G. Financial Products sold provided a stream of premium payments to
the company with no expense stream. That's an example of what Rajan calls
"goosing up returns" with latent risk. Rajan asks (on page 388) "If firms
today implicitly are selling various kinds of default insurance to goose up
returns, what happens if catastrophe strikes?" This is a fair question.

The flip side of the trade is equally problematic. Gregory Zuckerman in his
book The Greatest Trade Ever about John Paulson's hedge fund recounts the
difficulties that Paulson and others had holding on to their bets against the
housing market. Even Paulson, whose timing couldn't have been better, spent
a great deal of his time persuading investors to persist with the bet against
the market. But month after month, millions of dollars were paid out on the
credit default swap premia. The investors saw money spent and gone that could
have been used to buy assets with rising prices, or at least held safely with
a positive yield. As Rajan puts it (p. 338), "it takes a very brave investment
manager with infinitely patient investors to fight the trend, even if the trend
is a deviation from fundamental value."

Justin Lahart, writing in the Wall Street Journal in January 2009 about the
response to Rajan's paper at the conference recounts that "former Treasury
Secretary Lawrence Summers, famous among economists for his blistering attacks,
told the audience he found 'the basic, slightly lead-eyed premise of [Mr. Rajan's] paper to be largely misguided.'"

In a recent paper (on pages 285–87), Steven Gjerstad and Nobel laureate Vernon L. Smith
Vernon L. Smith
Vernon Lomax Smith is professor of economics at Chapman University's Argyros School of Business and Economics and School of Law in Orange, California, a research scholar at George Mason University Interdisciplinary Center for Economic Science, and a Fellow of the Mercatus Center, all in Arlington,...

 describe more fully (1) the contribution of derivatives to the flow of mortgage
funds that supported the housing bubble, (2) the concerns that Brooksley Born had
raised about the dangers inherent in these contracts, (3) Summers's contribution to
their deregulation, and (4) how these contracts precipitated the collapse of the
financial system in 2007 and 2008.
On April 18, 2010, in an interview on ABC's “This Week” program, Clinton said Summers was wrong in the advice he gave him not to regulate derivatives.

President of Harvard

In 2001, when George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....

 became President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....

, Summers left the Treasury Department and returned to Harvard as its 27th President, serving from July 2001 until June 2006. He is considered Harvard's first Jewish president, though his predecessor Neil Rudenstine had Jewish ancestry, and received praise from Harvard's Jewish community for his support. However, a number of Summers's decisions at Harvard attracted public controversy.

Cornel West affair

In an October 2001 meeting, Summers criticized African American Studies department head Cornel West
Cornel West
Cornel Ronald West is an American philosopher, author, critic, actor, civil rights activist and prominent member of the Democratic Socialists of America....

 for allegedly missing three weeks of classes to work on the Bill Bradley
Bill Bradley
William Warren "Bill" Bradley is an American hall of fame basketball player, Rhodes scholar, and former three-term Democratic U.S. Senator from New Jersey. He ran unsuccessfully for the Democratic Party's nomination for President in the 2000 election.Bradley was born and raised in a suburb of St....

 presidential campaign, and complained that West was contributing to grade inflation
Grade inflation
Grade inflation is the tendency of academic grades for work of comparable quality to increase over time.It is frequently discussed in relation to U.S. education, and to GCSEs and A levels in England and Wales...

. Summers also claimed that West's "rap" album was an "embarrassment" to the university. West pushed back strongly against the accusations. "The hip-hop scared him. It's a stereotypical reaction," he said later. 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
Princeton University
Princeton University is a private research university located in Princeton, New Jersey, United States. The school is one of the eight universities of the Ivy League, and is one of the nine Colonial Colleges founded before the American Revolution....

, where he had taught prior to Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...

.

Differences between the sexes

In January 2005, at a Conference on Diversifying the Science & Engineering Workforce sponsored by the National Bureau of Economic Research
National Bureau of Economic Research
The National Bureau of Economic Research is an American private nonprofit research organization "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community." The NBER is well known for providing start and end...

, 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".

Summers had prefaced his talk, saying he was adopting an "entirely positive
Positive science
In the humanities and social sciences, the term positive is used in at least two ways.The most common usage refers to analysis or theories which only attempt to describe how things 'are', as opposed to how they 'should' be. Positive means also 'value free'. In this sense, the opposite of positive...

, rather than normative
Normative
Normative has specialized contextual meanings in several academic disciplines. Generically, it means relating to an ideal standard or model. In practice, it has strong connotations of relating to a typical standard or model ....

 approach" and that his remarks were intended to be an "attempt at provocation."

Summers then began by identifying three hypotheses for the higher proportion of men in high-end science and engineering positions:
  1. The high-powered job hypothesis
  2. Different availability of aptitude at the high end
  3. Different socialization and patterns of discrimination in a search


The second hypothesis, different availability of aptitude at the high end, caused the most controversy. In his discussion of this hypothesis, Summers said that "even small differences in the standard deviation [between genders] will translate into very large differences in the available pool substantially out [from the mean]". Summers referenced research that implied differences between the standard deviations of males and females in the top 5% of twelfth graders under various tests. He then went on to argue that, if this research were to be accepted, then "whatever the set of attributes... that are precisely defined to correlate with being an aeronautical engineer at MIT or being a chemist at Berkeley... are probably different in their standard deviations as well".

Summers then concluded his discussion of the three hypotheses by saying:
So my best guess, to provoke you, of what's behind all of this is that the largest phenomenon, by far, is the general clash between people's legitimate family desires and employers' current desire for high power and high intensity, that in the special case of science and engineering, there are issues of intrinsic aptitude, and particularly of the variability of aptitude, and that those considerations are reinforced by what are in fact lesser factors involving socialization and continuing discrimination. I would like nothing better than to be proved wrong, because I would like nothing better than for these problems to be addressable simply by everybody understanding what they are, and working very hard to address them.
Summers then went on to discuss approaches to remedying the shortage of women in high-end science and engineering positions.

This lunch-time talk drew accusations of sexism and careless scholarship, and an intense negative response followed, both nationally and at Harvard. Summers apologized repeatedly. Nevertheless, the controversy is speculated to have contributed to his resigning his position as president of Harvard University the following year, as well as costing Summers the job of Treasury Secretary in Obama's administration
Presidency of Barack Obama
The Presidency of Barack Obama began at noon EST on January 20, 2009 when he became the 44th President of the United States. Obama was a United States Senator from Illinois at the time of his victory over Arizona Senator John McCain in the 2008 presidential election...

.

Summers's opposition and support at Harvard

On March 15, 2005, members of the Harvard Faculty of Arts and Sciences
Harvard Faculty of Arts and Sciences
The Harvard Faculty of Arts and Sciences is the largest of the seven faculties that constitute Harvard University.Headquartered principally in Cambridge, Massachusetts and centered in the historic Harvard Yard, FAS is the only division of the university responsible for both undergraduate and...

, which instructs graduate students in Harvard Graduate School of Arts and Sciences
Harvard Graduate School of Arts and Sciences
The Graduate School of Arts and Sciences is the academic unit responsible for many post-baccalaureate degree programs offered through the Faculty of Arts and Sciences at Harvard University...

 and undergraduates in Harvard College
Harvard College
Harvard College, in Cambridge, Massachusetts, is one of two schools within Harvard University granting undergraduate degrees...

, 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
Steven Pinker
Steven Arthur Pinker is a Canadian-American experimental psychologist, cognitive scientist, linguist and popular science author...

 defended the legitimacy of Summers's January lecture. When asked if Summers's 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."

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.

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."

Support of economist Andrei Shleifer

Harvard and Andrei Shleifer
Andrei Shleifer
Andrei Shleifer is a Russian American economist. From its inauguration in 1992 until it was shut down in 1997, Shleifer served as project director of the Harvard Institute for International Developments Russian aid project...

, a close friend and protege of Summers, controversially paid $28.5 million to settle a lawsuit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...

 by the U.S. government over the conflict of interest
Conflict of interest
A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other....

 Shleifer had while advising Russia's privatisation program. The US government had sued Shleifer under the False Claims Act
False Claims Act
The False Claims Act is an American federal law that imposes liability on persons and companies who defraud governmental programs. The law includes a "qui tam" provision that allows people who are not affiliated with the government to file actions on behalf of the government...

, as he bought Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...

n stocks 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
Treble damages
Treble damages, in law, is a term that indicates that a statute permits a court to triple the amount of the actual/compensatory damages to be awarded to a prevailing plaintiff, generally in order to punish the losing party for willful conduct. Treble damages are a multiple of, and not an addition...

.

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
United States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...

 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's 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
Institutional Investor (magazine)
Institutional Investor magazine is a monthly periodical published by Euromoney Institutional Investor. A separate international edition of the magazine was established in 1976 for readers in Europe and Asia. Capital Cities Communications purchased the magazine in 1984...

(January 2006), the magazine detailed Shleifer's alleged efforts to use his inside knowledge
Insider
An insider is a member of any group of people of limited number and generally restricted access. The term is used in the context of secret, privileged, hidden or otherwise esoteric information or knowledge: an insider is a "member of the gang" and as such knows things only people in the gang...

 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. Summers's 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's 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
Hedge (finance)
A hedge is an investment position intended to offset potential losses that may be incurred by a companion investment.A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, many types of...

 or speculation
Speculation
In finance, speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum...

. Summers approved the decision to enter into the swap contracts as president of the university and as a member of Harvard Corp., "the university's seven-member ruling body" which bears "the school's ultimate fiduciary responsibility." By late 2008, those positions had lost approximately $1 billion in value, a setback which forced Harvard to borrow significant sums in distressed market conditions to meet margin call
Margin Call
Margin Call is a 2011 American independent drama film, written and directed by J.C. Chandor. The film has an ensemble cast that includes Kevin Spacey, Demi Moore, Paul Bettany, Jeremy Irons, Zachary Quinto, Stanley Tucci, Simon Baker, and Penn Badgley...

s on the swaps. In the end Harvard paid $497.6 million in termination fees to investment banks and has agreed to pay another $425 million over 30–40 years. 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.

Resignation as Harvard President

On February 21, 2006, Summers announced his intention to step down at the end of the school year effective June 30, 2006. Harvard agreed to provide Summers on his resignation with a one-year paid sabbatical leave, subsidized a $1 million outstanding loan to the university for his personal residence, and provided other payments. 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
Drew Gilpin Faust
Catherine Drew Gilpin Faust is an American historian, college administrator, and the president of Harvard University. Faust is the first woman to serve as Harvard's president and the university's 28th president overall. Faust is the fifth woman to serve as president of an Ivy League university, and...

 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. He also joined the D. E. Shaw Group
D. E. Shaw & Co
D. E. Shaw & Co., L.P. is an American-based global investment management firm founded in 1988 by David E. Shaw and based in New York City. The firm's trading mode is systematic and computer-driven.-Investment Strategy:...

 in October 2006 as a part-time managing director.
Summers also has been authoring a column for the Financial Times
Financial Times
The Financial Times is an international business newspaper. It is a morning daily newspaper published in London and printed in 24 cities around the world. Its primary rival is the Wall Street Journal, published in New York City....

.

Post-Harvard-presidency career

On October 19, 2006, he became a part-time managing director of the investment and technology development firm D. E. Shaw & Co. He drew a large salary from this job.

Upon the death of libertarian economist Milton Friedman
Milton Friedman
Milton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...

, Summers wrote an Op-Ed in The New York Times entitled "The Great Liberator" arguing that "any honest Democrat
Democratic Party (United States)
The Democratic Party is one of two major contemporary political parties in the United States, along with the Republican Party. The party's socially liberal and progressive platform is largely considered center-left in the U.S. political spectrum. The party has the lengthiest record of continuous...

 will admit that we are now all Friedmanites." In it Summers wrote that even though Friedman's contributions to monetary policy
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...

 had been highly lauded, his most important contribution may have been "in convincing people of the importance of allowing free markets to operate."

Henry Kissinger
Henry Kissinger
Heinz Alfred "Henry" Kissinger is a German-born American academic, political scientist, diplomat, and businessman. He is a recipient of the Nobel Peace Prize. He served as National Security Advisor and later concurrently as Secretary of State in the administrations of Presidents Richard Nixon and...

 once said that Larry Summers should "be given a White House post in which he was charged with shooting down or fixing bad ideas."
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
United Nations Conference on Trade and Development
The United Nations Conference on Trade and Development was established in 1964 as a permanent intergovernmental body. It is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues....

.

In February 2009, he quoted John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...

, saying "When circumstances change, I change my opinion", reflecting both on the failures of Wall Street
Wall Street
Wall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...

 deregulation and his new leadership role in the government bailout.

National Economic Council

As director of the White House National Economic Council, he emerged as a key economic decision-maker in the Obama administration, where he attracted both praise and criticism. There had been friction between Summers and former Federal Reserve Chairman Paul Volcker
Paul Volcker
Paul Adolph Volcker, Jr. is an American economist. He was the Chairman of the Federal Reserve under United States Presidents Jimmy Carter and Ronald Reagan from August 1979 to August 1987. He is widely credited with ending the high levels of inflation seen in the United States in the 1970s and...

, as Volcker accused Summers of delaying the effort to organize a panel of outside economic advisers, and Summers had cut Volcker out of White House meetings and had not shown interest in collaborating on policy solutions to the economic crisis. On the other hand, Obama himself was reportedly thrilled with the work Summers did in his first few weeks on the job. And Peter Orszag
Peter Ország
Peter Ország is a Slovak ice hockey referee, who referees in the Slovak Extraliga.-Career:He has officiated many international tournaments including the Winter Olympics. He has been named Slovak referee of the year....

, another top economic advisor, called Summers "one of the world's most brilliant economists."

In January 2009, as the Obama Administration tried to pass an economic stimulus spending bill, Representative Peter DeFazio
Peter DeFazio
Peter Anthony DeFazio is the U.S. Representative for , serving since 1987. He is a member of the Democratic Party. The district includes Eugene, Springfield, Roseburg and part of Corvallis. As Oregon's most senior member of Congress, he is the dean of Oregon's House of Representatives delegation...

 (D-OR.
Oregon
Oregon is a state in the Pacific Northwest region of the United States. It is located on the Pacific coast, with Washington to the north, California to the south, Nevada on the southeast and Idaho to the east. The Columbia and Snake rivers delineate much of Oregon's northern and eastern...

) criticized Summers, saying that he thought that President Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...

 is "ill-advised by Larry Summers. Larry Summers hates infrastructure." DeFazio, along with liberal economists including Paul Krugman
Paul Krugman
Paul Robin Krugman is an American economist, professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times...

 and Joseph Stiglitz, had argued that more of the stimulus should be spent on infrastructure, while Summers had supported tax cuts.
Summers had come under fire for accepting perks from Citigroup
Citigroup
Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...

, including free rides on its corporate jet in 2008. According to the Wall Street Journal, Summers called Senator Chris Dodd (D-CT
Connecticut
Connecticut is a state in the New England region of the northeastern United States. It is bordered by Rhode Island to the east, Massachusetts to the north, and the state of New York to the west and the south .Connecticut is named for the Connecticut River, the major U.S. river that approximately...

) asking him to remove caps on executive pay at firms that have received stimulus money, including Citigroup.

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
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...

 D. E. Shaw, and collected $2.7 million in speaking fees from Wall Street
Wall Street
Wall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...

 companies that received government bailout money.

In early April 2010, Joshua Green reported that Summers was frustrated with his position at the NEC and upset that he was not chosen to replace Ben Bernanke
Ben Bernanke
Ben Shalom Bernanke is an American economist, and the current Chairman of the Federal Reserve, the central bank of the United States. During his tenure as Chairman, Bernanke has overseen the response of the Federal Reserve to late-2000s financial crisis....

 as head of the Federal Reserve. It was considered likely that Summers would soon leave the post.

On September 21, 2010, the White House announced that Summers would step down from his position on the NEC at the end of the year, to return to Harvard University. In a speech to the Economic Policy Institute
Economic Policy Institute
The Economic Policy Institute is a 501 non-profit, liberal, nonpartisan think tank that seeks to broaden the public debate about strategies to achieve a prosperous and fair economy...

 upon leaving his post, Summers "warn[ed] against the creeping cost of government" and "approvingly quot[ed] Daniel Patrick Moynihan
Daniel Patrick Moynihan
Daniel Patrick "Pat" Moynihan was an American politician and sociologist. A member of the Democratic Party, he was first elected to the United States Senate for New York in 1976, and was re-elected three times . He declined to run for re-election in 2000...

's argument that increased government involvement in the health care
Health care
Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...

 sector is a risky idea."

Post-NEC career

In addition to teaching at Harvard after leaving the Obama administration, in June 2011 Summers joined the board of directors of Square
Square (payment service)
Square is an electronic payment service, and the name of the card-reading device it uses. Square allows users in the United States to accept credit cards through their mobile phones, either by swiping the card on the Square device or by manually entering the details on the phone.-Creation:The...

, a company developing an electronic payment service, and became a special adviser at venture capital firm Andreessen Horowitz
Andreessen Horowitz
Andreessen Horowitz is a venture capital firm founded by Marc Andreessen and Ben Horowitz. The company's headquarters is in Menlo Park, California.The venture capital fund was started in June 2009 with an initial capital of $300 million....

.

In popular culture

The 2010 film The Social Network
The Social Network
The Social Network is a 2010 American drama film directed by David Fincher and written by Aaron Sorkin. Adapted from Ben Mezrich's 2009 book The Accidental Billionaires, the film portrays the founding of social networking website Facebook and the resulting lawsuits...

, which deals with the founding of the social networking site Facebook
Facebook
Facebook is a social networking service and website launched in February 2004, operated and privately owned by Facebook, Inc. , Facebook has more than 800 million active users. Users must register before using the site, after which they may create a personal profile, add other users as...

, shows Summers (played by Douglas Urbanski
Douglas Urbanski
Douglas Urbanski is an American theater impresario, raconteur and film producer.Urbanski is a business partner with actor Gary Oldman and he also runs a talent management firm, DMG...

), in his then-capacity as President of Harvard, meeting with Cameron
Cameron Winklevoss
Cameron Howard Winklevoss is an American rower and entrepreneur. He competed in the men's pair rowing event at the 2008 Beijing Olympics with his identical twin brother and rowing partner Tyler Winklevoss. Cameron and his brother are known for co-founding HarvardConnection along with Harvard...

 and Tyler Winklevoss
Tyler Winklevoss
Tyler Howard Winklevoss is an American rower and entrepreneur. He competed in the men's pair rowing event at the 2008 Beijing Olympics with his identical twin brother and rowing partner Cameron Winklevoss...

 to discuss their accusations against Mark Zuckerberg
Mark Zuckerberg
Mark Elliot Zuckerberg is an American computer programmer and Internet entrepreneur. He is best known for co-creating the social networking site Facebook, of which he is chief executive and president...

. Summers is depicted as dismissive of the twins' concerns and as unable to appreciate the potential value of Facebook. In a July 2011 interview Summers seemed to confirm the movie's accuracy in its depiction of his handling of the Winklevoss twins.

Larry Summers was mentioned several times during Barack Obama's appearance on The Daily Show
The Daily Show
The Daily Show , is an American late night satirical television program airing each Monday through Thursday on Comedy Central. The half-hour long show premiered on July 21, 1996, and was hosted by Craig Kilborn until December 1998...

.

In the 2010 documentary Inside Job
Inside Job (film)
Inside Job is a 2010 documentary film about the late-2000s financial crisis directed by Charles H. Ferguson. The film is described by Ferguson as being about "the systemic corruption of the United States by the financial services industry and the consequences of that systemic corruption." In five...

, Summers is presented as one of the key figures behind the late-2000s financial crisis
Late-2000s financial crisis
The late-2000s financial crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s...

. Charles Ferguson points out the economist's role in what he characterizes as the deregulation of many domains of the financial sector.

External links

  • Faculty page at the John F. Kennedy School of Government
    John F. Kennedy School of Government
    The John F. Kennedy School of Government at Harvard University is a public policy and public administration school, and one of Harvard's graduate and professional schools...

     at Harvard University
    Harvard University
    Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...

  • Profile at the U.S. Treasury Department
  • Lawrence Summers at Big Think
    Big Think
    Big Think is an online knowledge forum, founded in 2007, that features interviews, multi-media presentations, and roundtable discussions with major intellectuals from a wide range of fields....

  • Voices on Antisemitism Interview with Lawrence Summers from the US Holocaust Museum, , February 15, 2007
  • Robert Scheer on Resignation of Lawrence Summers – video report by Democracy Now!
    Democracy Now!
    Democracy Now! and its staff have received several journalism awards, including the Gracie Award from American Women in Radio & Television; the George Polk Award for its 1998 radio documentary Drilling and Killing: Chevron and Nigeria's Oil Dictatorship, on the Chevron Corporation and the deaths of...

    , September 22, 2010

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