Markets pop as Summers exits

While Obama insisted he had not settled on a nominee, there were ample indications that Summers was a favored candidate. The president defended Summers and his record both in public to reporters and in private to his Democratic colleagues in the House and Senate.

However, Democratic resistance to a Summers pick ultimately sank that potential nomination. Several Senate Democrats had publicly aligned themselves with Yellen, citing her record on financial regulation, as well as her ability to build consensus, compared to Summers, who favored a lighter regulatory hand as Treasury Secretary to President Clinton, and has a reputation for a strong, brusque personality. As many as four Democrats on the Senate Banking Committee were expected to oppose a Summers pick, meaning the president would need to rely on Republicans on the panel to avoid a Summers pick from being shot down.

In a letter sent to the president Sunday, Summers said a likely contentious confirmation battle within the president's own party drove him to drop out. The president hailed Summers Sunday, calling him a "critical member of my team" in the early days of his administration, as they worked to steer the economy through the financial crisis.