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U.S. Senate's No. 2 Republican would oppose Summers for Fed chief

Former U.S. Treasury Secretary Lawrence H. "Larry" Summers speaks during a financial and economic event at the London School of Economics (L
Former U.S. Treasury Secretary Lawrence H. "Larry" Summers speaks during a financial and economic event at the London School of Economics (L

By Rachelle Younglai

WASHINGTON (Reuters) - The U.S. Senate's No. 2 Republican would vote against President Barack Obama's former economic adviser Lawrence Summers if he is nominated to serve as Federal Reserve chairman, the lawmaker's office said on Thursday.

Senator John Cornyn of Texas, the party's whip in the Senate, is the most senior Republican to publicly declare that he does not want Summers to succeed Ben Bernanke as Fed chairman.

"If you look at Larry Summers' record, he has a history of promoting stimulus funding and higher taxes, and that's not in line with Texas values," said Cornyn's spokeswoman Megan Mitchell.

Summers, who served as Treasury secretary during the Clinton administration, and Fed Vice Chair Janet Yellen are considered the top two candidates to replace Bernanke, whose term expires at the end of January. The White House has said Obama will announce his decision in the fall.

A number of Democratic senators have taken the unusual step of criticizing Summers and urging Obama to nominate Yellen instead, suggesting the president would have to round up a fair amount of Republican support to get Summers confirmed.

Cornyn's opposition underscores the difficulty Obama would face. Democrats control the chamber 54-46, but any nominee would likely need to secure 60 votes to clear procedural hurdles.

"It's ugly and it's not really a fight that we want to have," said a Democratic leadership aide.

Another Democratic Senate aide said the White House had done little to ease concerns about Summers and was running out of time to convince members of the Senate Banking Committee, who will vet any nomination, that he was worth supporting. "This is going to be an uphill battle for them," the aide said.

Although Democrats have a 12-10 advantage on the banking panel, two of them - Senators Sherrod Brown of Ohio and Jeff Merkley of Oregon - have said they are planning on voting against Summers. A third - Senator Elizabeth Warren of Massachusetts, who is a hero among progressives because of her attacks against Wall Street - might also oppose him.

If all three were to defect, Obama would have to secure at least three Republican votes just to move the nomination to the full Senate for final consideration.

YELLEN'S SUPPORT GROWS

Cornyn's spokeswoman said the senator had not made a decision on Yellen and was looking at her record.

As National Economic Council director during Obama's first term, Summers was part of the administration's team that helped craft a more than $800 billion fiscal package of spending and tax cuts to boost the economy.

At the time, most Republicans, including Cornyn, voted against the stimulus, saying it was a waste of taxpayer funds. Liberal Democrats said the package was not big enough.

Summers' actions as Obama's top economic adviser, as well as his role in easing banking rules and opposing derivative regulations when he was Treasury secretary in the 1990s, have come back to haunt him, as have comments he made when president of Harvard University that suggested a lack of aptitude might explain why so few women held top engineering and science jobs.

Now, progressive and women's groups are actively campaigning to prevent him from becoming Fed chairman.

Heidi Hartmann, president of the Institute for Women's Policy Research, has spearheaded a letter to Obama urging him to choose Yellen.

The letter, which she began circulating Sunday night and expects to send to Obama next week, has been signed by more than 400 economists, including former Fed vice chairs Alan Blinder and Alice Rivlin, former Obama adviser Christina Romer, and leading academics Jeffrey Sachs and Joseph Stiglitz.

(Additional reporting by Alister Bull; Editing by Mohammad Zargham)

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