In the face of growing opposition from liberal Democrats and women's groups, Larry Summers, a former key economic adviser of President Barack Obama, has withdrawn his name from consideration to head America's central bank.
Summers, whom Obama credited with "playing no small part" in dealing with the 2008 economic crisis as head of his National Economic Council during his first term, was reported to be hot favourite as the president's pick as the
next chairman of the Federal Reserve, America's top economic policy regulator.
Obama said he spoke with Summers, who served as treasury secretary during the presidency of Bill Clinton, earlier Sunday and accepted his decision to be withdrawn from consideration to replace current Fed Chairman Ben Bernanke
whose term ends January 31.
"Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today," he said in a statement.
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Summers, who earned his reputation as a deregulator during the Clinton administration acknowledged that his confirmation hearings before the Senate could have been contentious.
In his letter to Obama announcing his withdrawal, Summers wrote that he "reluctantly concluded" that the confirmation process would be "acrimonious and not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation's ongoing economic recovery."
"Our nation badly needs a chairman with a solid record as a bank regulator," wrote Summers who has also served as President of Harvard.
In July, a group of Democratic Senators sent a letter to Obama urging him to choose top contender Janet Yellen, whom Obama nominated as vice chair at the Fed in 2010, due to her monetary policy experience.
Meanwhile, more than 350 economists, including Nobel Prize winner Joseph Stiglitz, and Alan Blinder, a former economic adviser to Bill Clinton and former Fed vice chair himself, have sent a letter to Obama calling on him to nominate Yellen to be the Fed's next chairman.
The letter credits Yellen for prescience in warning in 2005 about an impending real estate meltdown, for her consensus style of leadership and for her commitment to job growth.