Ex-Treasury Chief to Join D.E. Shaw

Lawrence H. Summers, the former U.S. Treasury secretary who resigned as Harvard University’s president this year after clashes with faculty members, will join New York hedge fund firm D.E. Shaw & Co. as a part-time managing director.

“Larry is an enormously gifted economist and has made major contributions as a researcher, a public servant and an academic leader,” David Shaw, chairman of the $25-billion fund manager, said in a statement Thursday.

Summers, 51, will work on “strategic initiatives” and “high-level portfolio management activities,” and help review the firm’s operations, Shaw said in the statement. The firm didn’t disclose how much Summers would be paid.

The $1.3-trillion hedge fund industry is struggling to produce market-beating returns while absorbing a record amount of money from wealthy investors and institutions. The more than 9,000 private pools of capital attracted $110.6 billion in the first nine months of the year, compared with $46.9 billion in all of 2005, according to data compiled by Hedge Fund Research Inc. of Chicago.

Summers is one of a growing number of former government officials who have ended up at hedge fund and private equity firms. Former President George H.W. Bush, former Secretary of State James A. Baker III and former British Prime Minister John Major have all worked at Carlyle Group, a buyout firm.

More recently, former Treasury Secretary Paul H. O’Neill joined New York-based buyout firm Blackstone Group as an advisor and former Secretary of State Colin L. Powell became a strategic limited partner at Menlo Park, Calif.-based venture capital firm Kleiner, Perkins, Caufield & Byers.

Summers stepped down as Harvard president in June after a tumultuous five-year tenure, the shortest since the Civil War. He repeatedly clashed with faculty from the school’s undergraduate college, who passed a no-confidence motion against him in March 2005. The faculty was preparing a second motion in February when he resigned.

It was Summers’ comments made about women’s aptitude for science and engineering at a January 2005 economics conference that ultimately led to faculty calls for his resignation. Summers repeatedly apologized for the remarks, which some attendees called sexist, and pledged more than $20 million to support women at the school.