Federal Reserve chairman Ben Bernanke presents the Fed's semi-annual monetary-policy report on Capitol Hill today, the start of two-day hearings.

On tap will be the Fed's massive quantitative easing programs and the exit strategy out of them, a dicey proposition that analysts say ranks right up with the US's exit strategy out of Iraq.

But although Bernanke is winning kudos and praise for making brilliant moves to save the US economy, chatter on the cocktail party circuit in Washington, DC is that Bernanke may not get asked back as the world's most powerful central banker when his term expires in January 2010, due to a variety of reasons (see below).

Reasons that have caused 60% of House members to co-sponsor a new bill that would give the Government Accountability Office the right for the first time to inspect the central bank's books, its monetary policymaking, its lending and its connections with foreign central banks, all now off-limits to Congressional interference.

Word is that instead President Barack Obama may tap Lawrence Summers, director of the National Economic Council and former Treasury Secretary, as the next Federal Reserve chairman. Besides Summers, other potential options include San Francisco Fed president Janet Yellen, and former Fed vice chairmen Roger Ferguson and Alan Blinder.

But would Summers be the best choice to replace Bernanke as chairman of the US Federal Reserve?

Dig deeper into Summers' background, and you'll not only see that Summers is potentially so radioactive that the White House may not decide to put him up as a replacement for Bernanke, but why it did not even deign to choose him to be US Treasury secretary, picking Timothy Geithner instead, as Summers may not have survived a Congressional confirmation hearing.

Summers is widely praised as a top notch economist nonpareil, with innovative contributions to economic research in public finance, labor and macroeconomics. For one, Summers was a key backer of a cut in the capital gains tax rate, arguing such taxes were inefficient.

However, at minimum the criticisms about Summers--his prior positions on bank regulatory policies, notably derivatives, his conflicts of interest with Wall Street, his incendiary Obama Economyremarks--would make for volatile confirmation hearings.

And the case against Summers as Fed chairman is separate from a sense in Washington that Summers is simply too blunt and domineering, that he would condescend to Einstein if he could, as one analyst said, or that he is a self-made man who worships his own creator.

Below is a tip sheet on what to watch out for in this growing debate about Summers as the new Fed chair.

You'll find also key issues that affect your investment portfolio, the stock market, and the economy.

The tip sheet was compiled with the assistance of Fox News analyst James Farrell, a sharp financial analyst.

The question lawmakers are struggling with is this: are the following Fed actions done on Bernanke's watch enough to replace him?

That under Bernanke the Fed has blown out its balance sheet to more than $2 tn to bail out Wall Street and the banks; that the Fed is now more entangled in fiscal policy and subject to political pressures than ever before, threatening its cherished independence; that it used taxpayer money to make 100% whole the recklessly disastrous bets made by Wall Street firms in the AIG bailout, including Goldman Sachs.

There's more: That the Fed gave $20 bn in taxpayer money without conditions to Bank of America to buy Merrill Lynch, after chief exec Ken Lewis threatened to ditch the deal; and that Bernanke's own actions have raised questions over whether the Fed can be the systemic risk regulator when as Fed governor, for example, he agreed with Greenspan in keeping rates drastically low during the bubble years, inflating the bubble even more, or that he said subprime loans were not a problem before the credit crisis blew up in the summer of 2007.

Summers Soft on Derivatives Regulation

Derivatives have created a worldwide financial meltdown, a daisy chain of toxic paper that has zapped investment portfolios worldwide. These ticking time bonds have created havoc in governments from here to Europe to Russia to Asia.

What's gone unnoticed is that in the late '90s Summers did nothing to stop former Fed chair Alan Greenspan from pressuring US accounting rule makers to water down a proposed new derivatives accounting rule that may have helped stop the current crisis. Many business leaders had strongly opposed the new rule.

In fact, in 1998, Summers testifiedin Congress against regulating the derivatives market.

Derivatives, such as mortgage-backed bonds, are financial contracts whose values are linked to, or derived from, those of underlying assets such as bonds, stocks or commodities.

Ten years before the worst meltdown since the Great Depression, in the summer of 1997, Greenspan demanded that the Financial Accounting Standards Board weaken the new rule, which would have forced companies to book changes in the market value of their derivatives contracts. The FASB sets the rules for how companies report their profits.

Greenspan wanted the FASB to eliminate the profit adjustment and instead force only large companies to merely disclose the fair market value of their derivatives in supplements to their financial statements.

Greenspan said the new rule "may discourage prudent risk-management activities," would create "volatility" in bank capital levels and give an inaccurate picture of banks' financial conditions.

Greenspan's pressure came just three years after the business world had pressured the FASB to stop a new rule that would force companies to book for the first time the value of stock options as an expense.

Thanks to pressure from Greenspan and business executives, it took the FASB years more to pass the new rule.

In 1998, Summers also defended derivatives in testimony before Congress.

AIG BonusesHe said that Wall Street firms who make these trades "are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies and most of which are already subject to basic safety and soundness regulation under existing banking and securities laws."

Summers added that to "date there has been no clear evidence of a need for additional regulation of the institutional OTC [over the counter] derivatives market, and we would submit that proponents of such regulation must bear the burden of demonstrating that need."

(Summers might now very well conclude that the current financial mess has provided the "clear evidence" to support regulating derivatives, Farrell says).

Summers also threw down another obstacle to cracking down on the ticking time bonds that are derivatives when he said that any move to regulating derivatives by the Commodity Futures Trading Commission "ought to come with the legitimacy of a clear legislative mandate from Congress."

Summers Supported Repeal of Glass-Steagall

Market analysts, watchdogs, and members of Congress now argue that the repeal of Glass-Steagall in November 1999 also helped create the current Chernobyl-level meltdown on Wall Street and the collapse in the US economy.

Glass-Steagall is the Depression-era act enacted in 1933 which put up a firewall between commercial and investment banking. With its repeal deposit-taking banks for the first time could wade into the dicey securities business, putting deposits at risk. 

Specifically, the repeal let commercial lenders such as Citigroup, once the largest US bank by assets that is now on government life support, to underwrite and trade instruments such as mortgage-backed securities and collateralized debt obligations and establish so-called structured investment vehicles, or SIVs, that bought those securities, says the Journal of Economic Perspectives, an economic journal published by the American Economic Association.

Banks had lobbied for the repeal of Glass Steagall beginning in the '80s out of fear over the rising economic might of Japan--never mind that Japanese banks were notorious for, ironically, having razor-thin capital cushions (as US banks subsequently did). Japan's banks soon led the country into its economic collapse.

When President Bill Clinton signed the Financial Modernization bill in 1999, which effectively repealed Glass-Steagall, then-Secretary Summers stated:

"This is the culmination of years of effort by many, many people, reflects the work of presidents, Treasury officials, members of Congress, those in the private sector, from both parties, and dedicated professionals, both inside and outside the government. With their help, I believe we have all found the right framework for America's future financial system."

Summers' Wall Street Fees and Perks

Summers has met with withering fire for accepting lucrative fees and perks from Wall Street, which he has been and is now paid by the US taxpayer to regulate.

At the time an economic adviser to Democratic presidential candidate Barack Obama, Summers  reportedly got a free ride home on a Citigroup jet in August 2008 after attending the Democratic National Convention in Denver.

In February 2009, a reporter asked White House press secretary Robert Gibbs at a press conference: "Was it appropriate for an economic advisor to the President to do that? And should he [Summers] in some way recuse himself from dealing with anything that would involve Citigroup?"

Press secretary Gibbs replied: "I think last August, Larry Summers was a private citizen."

Summers also earned decent fees from Wall Street in the year before he joined the White House and began helping to oversee the financial industry. Obama

Specifically, theNew York Timesreported in April 2009 that Summers was paid millions of dollars in 2008 by Wall Street firms over which he would eventually exert regulatory power. Summers earned $5.2 mn from the hedge fund D. E. Shaw, and collected $2.7 mn in speaking fees from Wall Street companies that received government bailout money

Summers reported in financial disclosure forms that he made 40 paid appearances, including $202,500 for two speeches to the investment firm Goldman Sachs. Citigroup paid him $99,000 for two speeches, JPMorgan Chase $67,500 for one speech, and the now defunct Lehman Brothers $135,000 for two speeches.

Also, American Express paid him $67,500 for one speech, and State Street paid him $45,oo0 for one speech as well, according to his disclosure report.

Summers Pressured Congress to Stop Exec Pay Caps

According to the Wall Street Journal, Summers called Democratic Senator Chris Dodd, chair of the Senate Banking Committee, asking him to remove caps on executive pay at firms which have received bailout money, including Citigroup. Treasury secretary Geithner also called as well, the Journal says.

The White House was worried that the Senate's rules "would prompt a wave of banks to return the government's money and forgo future assistance, undermining the aid program's effectiveness."

The legislation restricted bonuses more severely than the Obama administration's pay limits, as it would have barred any company "receiving bailout funds from paying top earners bonuses equal to more than one-third of their total annual compensation. That could severely crimp pay packages at big banks, where top officials commonly get relatively modest salaries but often huge bonuses."

Summers' Role in the California Energy Crisis

Did Summers do anything to stop high-level pressure on then California governor Gray Davis to relax regulation of the energy markets during the 2000 energy crisis.

According to the book "Conspiracy of Fools: A True Story"by New York Times reporter Kurt Eichenwald (Random House, 2005), then Federal Reserve chairman Greenspan and Treasury Secretary Summers met with governor Davis on December 26, 2000 to discuss California's power crisis. 

While Gray opened the meeting by stating that "if [energy] deregulation fails in California, it will fail in the United States," Greenspan and Summers disagreed.

"Truthfully, governor, California hasn't deregulated," the book quotes Greenspan as saying. "The state simply replaced one form of regulation with another. It's become a system of central planning run amok."

The book says Summers silently agreed, and then joined in. "You have a fixed price set by the state for selling electricity to the public. But you have a variable, floating price when you buy electricity," the book quotes Summers as saying.

"That's not sustainable," the book quotes Greenspan as saying. "The problem is your regulatory system. And there are a very limited number of solutions. But the first step is that prices for consumers are going to have to go up."

Davis showed no emotion, the book says. "I really feel the problem is the energy producers," he said. "They're manipulating the markets and forcing up prices."

"They may be," the book quotes Greenspan as saying. "But that's beside the point. That's not causing the problem; that's making it worse. The real problem is a supply-and-demand imbalance."

Summers Remarks About Aptitude of Women

Summers stepped down as president of Harvard University in 2006 after a no-confidence vote by the university's faculty. Among other things, Summers created a furor in a 2005 speech he gave in which he said that women's under-representation in the top levels of academia is due to a "different availability of aptitude at the high end."

In discussing why women may have been underrepresented "in tenured positions in science and engineering at top universities and research institutions," because Summers said his "best guess" was that "there are issues of intrinsic aptitude, and particularly of the variability of aptitude."

Summers said that this variation, combined with other factors, "probably explains a fair amount of this problem."

Although he later said his statements were an "attempt at provocation," Summers eventually apologized for his remarks and later stepped down in 2006.

"I was wrong to have spoken in a way that has resulted in an unintended signal of discouragement to talented girls and women," Summers said, later adding: "Despite reports to the contrary, I did not say, and I do not believe, that girls are intellectually less able than boys, or that women lack the ability to succeed at the highest levels of science."

Summers Opposed Infrastructure Spending?

Blogs on the Internet likely have this one wrong.

This controversy started when Democrat Rep. Peter DeFazio stated on MSNBC's The Rachel Maddow Showthat "Larry Summers hates infrastructure and some of these other economists. They were very much part of creating the problem, and now, they are going to solve the problem.  And they don't like infrastructure. So, they want to have a consumer-driven recovery."

Not quite.

Summers publicly advocated for infrastructure spending as part of a stimulus effort in Congressional testimony on September 9, 2008:

"There is a compelling case for significant new commitment to infrastructure spending. While infrastructure spending is often seen as operating only with significant lags, I have become convinced that properly designed infrastructure support can make a timely difference for the economy," Summers testified before Congress.

Summers added: "Evidence from the Minneapolis bridge collapse suggests that it is possible to launch infrastructure programs where the vast majority of the money is spent within a year...Properly designed infrastructure projects have the virtue of being helpful as short run stimulus, especially for the employment of the workers most hard hit by the housing decline, while at the same time augmenting the economy's productive potential in the long run."

Summers Fired a Harvard Whistleblower?

Despite what the blogosphere says, the evidence is thin that Summers while president of Harvard University made a controversial decision to fire a whistleblower worried about derivatives investments in the school's endowment.  

In 2002, a new employee of the company that manages Harvard's endowment (Harvard Management), Iris Mack, wrote to Summers to express concern about the endowment's investments in derivatives. Mack had asked Summers to keep the communication confidential. Marne Levine, chief of staff for Summers, assured her that the communications would be kept confidential. 

On July 1, 2002, Mack was called into a meeting by her boss, Jack Meyer, then the chief of Harvard Management. The next day Meyer fired her. Meyer told Mack that she was fired for making "baseless allegations against HMC to individuals outside of HMC."

When Mack threatened to sue for an unlawful firing, Harvard entered into a confidential settlement with her.