Grooming Mr. Summers

Larry Summers, once upon a time, never could have gone all the way to the top. That was the view of official Washington. He was too scruffy, too insensitive and just too damn brilliant, arrogantly treating important congressmen like the hapless foils he once trampled as a national debate champion. Summers's shirttails were always hanging out. And the plump former Harvard professor (who at 28 was the youngest ever to get tenure) was so absent-minded that, an associate remembers, "he had a habit of not looking in the mirror after he shaved. There were always patches." Summers seemed, all in all, better suited to a wonk's cubicle in a basement somewhere than the world stage. "Four years ago, if you had said Larry Summers would be Treasury secretary after Bob Rubin," says a senior administration official who knows him well, "people would have laughed in your face." Except on Wall Street, where the response to an ivory tower type like Summers would have been more direct: Sell!

Behold, then, the "new" Lawrence Summers, Treasury secretary-designate at 44 and, by most accounts, a virtual shoo-in for Senate confirmation. There was nary a snicker last week as President Clinton announced that Summers, a world-class economist and Rubin's deputy since 1995, would replace him in July. Even Wall Street, the only critic anyone cares about anymore, took the Summers appointment in stride. The Dow plunged about 200 points on the long-feared news that Rubin, acclaimed as one of the best Treasury secretaries ever, was leaving. Then it quickly recovered, perhaps as players realized that Rubin's departure may be the surest sign that the global financial crisis is over. In a Rose Garden ceremony, Summers was smooth, diplomatic and hitting his speech lines like a pro--even, amazingly enough, evoking sympathy. Summers, who suffered Hodgkin's disease as a young grad student, nearly broke down as he humbly thanked his parents, his family--and Robert Rubin, from whom "I can't begin to describe how much I have learned."

A great deal, apparently. Rubin is credited with much of Clinton's economic success, especially the fiscal discipline that led to America's longest peacetime expansion. But the grooming of Lawrence H. Summers may be, in some ways, his greatest feat. Rubin, a self-effacing but strong-willed presence who became Clinton's most influential cabinet member, has been pining since 1996 to go back home to New York, where his wife still lives. But Rubin became, in the view of the markets, indispensable--especially during the overlapping Asia and impeachment crises. So to find a way out, Rubin began to play a kind of benign Svengali to the rough-edged Summers. During the Asia crisis, Rubin constantly pushed Summers into the limelight, sending him abroad to dicker with prime ministers before the cameras, missing no opportunity to credit him for policy successes. At the same time Rubin worked on Summers's personality flaws, deflating his ego by poking fun at his highhandedness. (Rubin delivered a last shot in the Rose Garden, saying that "one of the true pleasures of being secretary of the Treasury" is to "laugh at Larry.") In an interview late last week, the secretary continued to tirelessly shape his protege's image, especially Summers's main weak point: his lack of market experience. Rubin described first meeting Summers on the trading floor at Goldman, Sachs in the mid-'80s. "I thought even then," he confided to reporters, " 'he has a feel for this'."

Associates say that Summers worked just as hard to remake himself in Rubin's image. "I think he made it a personal mission to learn from Bob," says Gene Sperling, Clinton's economic adviser. Says another senior U.S. official: "From the beginning of his life Larry was the best student in his class. That is true here. He realized that if he was going to achieve his goal, he would have to become more even-keeled in discussions, more socially adept, not walk into meetings and blow everybody away with how brilliant he is and indicate his utter contempt for their existence."

Ultimately, the Larry Summers makeover worked. Today, says his ex-Treasury colleague David Lipton, "there's no economist who's better at diplomacy and the management and understanding of markets, and there's no one in the markets who's a better conceptualizer" than Summers. Some say the decisive moment for Summers' reputation came in early September, as the president and his team of deputies stepped off their plane in Moscow at the height of the crisis. The then Prime Minister Viktor Chernomyrdin greeted each member with a grunt. Then he came to Summers and his face lit up. "Oh, Dr. Summers is so well respected," he exclaimed to Clinton. As one official tells it, "That's what made the president think that Larry absolutely could represent the United States." Rubin pronounced his own verdict on his handiwork in an interview. His Treasury Department and the one run by Summers, he said, "will be a seamless web."