Bernstein is someone whose opinion I value.

http://jaredbernsteinblog.com/summers-and-the-banks/

Summers and the Banks

Aug 28, 2013 at 11:31 pm

Beyond pointing out that I don’t want either of them to mow my lawn, I’ve remained neutral in the debate over Yellen vs. Summers for Fed chair. I continue to think they’re both fine choices and that the differences between what they bring to the job and how they’d run the Fed are far more narrow than you’d think from the frenzy of the past few weeks. So far, the main thing we’ve learned is that Washington really loves a horse race and that the White House has misplayed this (I can’t imagine they wanted this public fight right now).

If I’ve put any bit of my thumb on the scale, it’s as follows, as quoted in the Times the other day: “’All else equal, I would not lightly dismiss the opportunity to break a glass ceiling,’ said Jared Bernstein, a former Obama economic adviser…who lauded both Mr. Summers and Ms. Yellen on their merits.”

But in the interest of fairness, I also wanted to weigh in briefly on ways in which Larry Summers views on financial market oversight, a critical part of the job of Fed chair, have been misrepresented in some accounts. I am well aware of mistakes he made in the Clinton years in this regard, but he learned from those mistakes, and frequently quoted Keynes’ line: “When the facts change, I change my mind.” In his subsequent writings and in my work with him on these issues as a member of the President’s economics team in 2009 and 2010, I heard views quite different from those now being ascribed to him.

First, before he joined the administration and well in advance of the collapse of Bear and Lehman, Summers made an observation and a suggestion that might surprise some of those who see him as representing Wall St. Regarding the proliferation of securitization and hedging through derivatives, he wrote in late 2006 that “…innovations that contribute to risk spreading in normal times can become sources of instability following shocks to the system as large-scale liquidations take place.”

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