Summers -- a former secretary of the treasury who also served as director of President Barack Obama's National Economic Council -- had been widely regarded as a front-runner to succeed Bernanke, who is retiring at the end of the year. However, the prospect of Summers' nomination was not well received among many liberals in and outside of Congress.
He told Obama of his decision in a telephone call Sunday and followed it up with a letter in which he said he has "reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation's ongoing economic recovery."
In a statement issued by the White House, Obama said he accepted Summers' decision.
"Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today," the president said. "I will always be grateful to Larry for his tireless work and service on behalf of his country, and I look forward to continuing to seek his guidance and counsel in the future."
Fed Vice Chairman Janet Yellen and former Fed Vice Chairman Don Kohn remain as leading contenders to succeed Bernanke, The Washington Post said.
Obama had favored Summers, the newspaper said.
Citing a person close to the White House whose name it did not report, the Post said a Summers nomination would have run into "a perfect storm of bad timing" during Senate consideration of his nomination-- including not only pushback from liberals but also a series of difficult budget issues during the fall.
"It would have been absolute war, and the president would have had to spend all of his political capital," the source said. "Larry decided not to drag him through it."