Former US Treasury Secretary Lawrence Summers withdrew yesterday from consideration to succeed US Federal Reserve Chairman Ben Bernanke.
The move came after fierce opposition from within the Democratic Party hurt his chances of being confirmed in Congress.
Summers was a former top aide to President Barack Obama.
He was widely regarded as a brilliant economist and a shrewd and decisive policy maker, was considered to be the front-runner for the position to replace Bernanke, whose second term expires in January.
But Summers was dogged by controversies including his support for deregulation in the 1990s when he ran the Treasury Department in the Clinton administration - blamed by some for the financial crisis of 2007-2009 - as well as for comments he made about women's aptitude while president of Harvard.
Summers' withdrawal appeared to open the door for the nomination of Fed Vice Chair Janet Yellen, who was seen as his chief rival for the position.
Yellen, who has a long career in the Fed system and also chaired the White House Council of Economic Advisers under former president Bill Clinton, would be the first woman to lead the US Fed.
Still, President Obama has said he is also considering others, and has mentioned former Vice Chairman Donald Kohn, who retired in 2010 after 40 years at the Fed.
Roger Ferguson, who was vice chairman from 1999-2006 and is currently chief executive of the academic retirement fund TIAA-CREF is also considered a possibility.
Former Treasury Secretary Timothy Geithner, while popular at the White House made clear over the weekend he has not wavered from his oft-expressed disinterest in the job.
Summers' withdrawal in a letter to Obama in which he said any confirmation process would likely be acrimonious and a distraction came after weeks of intense political pressure for the administration.
It was not clear if Summers was persuaded by Obama to withdraw because of growing fears that nominating him as Fed Chairman would lead to an ugly battle within the president's own party, or whether Summers decided himself that he did not want to go through such a potentially damaging process.
Word that the president was leaning toward nominating Summers over Yellen elicited an unprecedented backlash against a potential nominee to run the US Federal Reserve.
Summers said that the storm pointed to a difficult confirmation process that could hurt the president's economic
agenda and the institution, and decided to pull back.
"I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the administration, or ultimately, the interests of the nation's ongoing economic recovery," he wrote in his letter to Obama.
Investors took the withdrawal of Summers as a green light for risk and lower interest rates, with initial market reactions signaling a view that the bank's next chief was more likely than Summers to extend an era of easy money that has flooded global markets with cash.
The weekend developments come at a sensitive time for the Fed. On Wednesday it is expected to announce a plan to start winding down its massive stimulus, perhaps one of the most pivotal policy maneuvers ever attempted by the Fed.
