Bill Clinton defends Summers, backs Yellen to be Fed chief

WASHINGTON -- Former President Bill Clinton said the harsh criticism of Lawrence H. Summers that led to his withdrawal from consideration to be the next Federal Reserve chairman was inaccurate and that the former Treasury secretary did not excessively favor financial deregulation in the late 1990s.

“I think there’s this kind of cartoon image that’s been developed that somehow Larry Summers was a one-note Johnny just trying to let big financial titans ravage the land, and it’s just ludicrous,” Clinton said in an interview on CNN’s “Fareed Zakaria GPS” that aired Sunday.

Clinton also said he’d be “thrilled” if former Fed Vice Chair Janet L. Yellen gets the nomination to succeed Fed Chairman Ben S. Bernanke, whose second four-year term expires in January.

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With Summers’ withdrawal last week from contention to be Fed chief, Yellen is considered the front-runner for the job. President Obama could announce a nomination as early as this week.

Clinton played a major role in the careers of Summers and Yellen.

He nominated Yellen in 1994 for her first stint on the Fed board and then appointed her to head his Council of Economic Advisors.

Clinton picked Summers to be a top official in his administration, elevating him to Treasury secretary in 1999.

This summer, liberals launched an aggressive campaign against a potential Summers nomination to lead the Fed amid reports he was Obama’s first choice.

Opponents said Summers’ deregulatory positions during the Clinton administration, including supporting the repeal of the Glass-Steagall law that separated investment banking from traditional deposit-taking, helped lay the groundwork for Wall Street abuses that triggered the financial crisis.

Those charges also were a knock on Clinton’s record. So his defense of Summers also served as a defense of the former president’s own policies.

“He’s a friend of mine. And I think that a lot of the criticism for which he’s been subject about what he did in my administration is not accurate,” Clinton said.

“When he worked for me, he played a central role in implementing much more balanced policies than have been let on, where we had more private sector growth, but we also had good sensible regulatory oversight,” he said.

Much of the criticism of Summers came from Democrats and liberal groups that preferred Yellen, who would be the first woman to lead the Fed.

Clinton did not appear to hold that against Yellen.

“I also consider Janet Yellen a friend and I think she’s shown good judgment,” Clinton said.

“She’s done a fabulous job at the Fed,” he continued. “She was really good at the Council of Economic Advisors when she worked in our administration. I think she would be great if the president chooses to appoint her.

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