Matthew C Klein, Columnist

Larry Summers's Billion-Dollar Bad Bet at Harvard

Summers made Harvard take a big bet on the future path of interest rates that ended up losing the university a billion dollars.

July 18, 2013 at 1:35 PM UTC

By Matthew C Klein

Matthew C. Klein writes for Bloomberg View about the economy and financial markets. He previously wrote for the Economist magazine and its economics blog, Free Exchange. Before that, Klein was a research associate at the Council on Foreign Relations, where he spent more than two years studying the history of the Federal Reserve and the intellectual history of monetary economics for an upcoming book by Sebastian Mallaby. He also worked at Bridgewater Associates, where he studied the economies of Central and Eastern Europe and advised institutional investors on asset-liability management. Klein has a bachelor's degree in history from Yale University. Originally from Chicago, he lives in New York.

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President Obama has only a few months to pick a candidate to replace Ben Bernanke as chairman of the Federal Reserve, and while the betting website Paddy Power has Fed Vice Chair Janet Yellen leading the pack at 1:4 odds, Larry Summers remains a strong contender at 11:2.

Despite an impressive resume that includes stints as Treasury Secretary and chief economist of the World Bank, there is a very good reason Summers shouldn't be in charge of monetary policy: He seems to have trouble with interest rates.