The posturing has begun. In secret and not-so-secret meetings across Washington and beyond, candidates and their supporters are getting together to plot strategy, lobby influential decision makers, and to put their candidate in the best possible light.
At this point there is only one thing we know for certain: a Clinton isn’t getting this position. That we know of.
The post in question is chair of the Fed, and another person that should not be getting it is Larry Summers.
Does the world really need the absurd prospect of having an significant contributor to the crash of 2008 placed in charge of one of the organizations best positioned to prevent another one? Mr. Summers is no advocate of regulation and as far back as 1998 spoke against any regulation of the over-the-counter derivatives market. In a speech before Congress, Mr. Summers essentially told those present not to worry because the OTC peddlers are smart people who are surely sharp enough to protect themselves.
Fast forward to post-apocalypse 2009 to Mr. Summers saying “Oops.”
Mr. Summers also lobbied for passage of the Gramm-Beach-Bliley Act which erased the protections enacted earlier by the Glass-Steagall Act that separated commercial and investment banks from each other.
Fast forward to post-apocalypse 2009 to Mr. Summers saying “Oops.”
Mr. Summers penchant for carelessly handling money entrusted to him continued during his tenure at Harvard, which lost approximately $1 billion on Summers- approved rate swaps that tanked during the recession.
Fast forward to…you get the point.
Mr. Summers is anything but an effective regulator, nor does he exhibit any desire to assume the role. Recently in the Huffington Post, University of Missouri Associate Professor William K. Black cited an article by Mr. Summers from January of 2008 that clearly illustrated his lack of desire for market supervision. Among other things, Black notes a statement where Mr. Summers asserted that by allowing more capital into the system better recognition of “impairments” will follow. Did he mean that by installing checks and balances on capital inflows the United States government was neutering the industry’s ability to properly police itself? Because they’re so good at that? Is there another post-1998 “oops” coming?
The article Mr. Black further highlights includes several statements showing Mr. Summers advocating for extremely loose accounting practices that would allow institutions to shield losses from their bottom line, thereby hiding them from investors and from clauses that would prevent executives from receiving lucrative performance bonuses. One wonders if investors in all of the companies that have recently appointed Mr. Summers to their boards appreciate having Fibber Fox partially control who has the keys to the henhouse.
Mr. Summers was also a passionate advocate of “Reinventing Government”, a process which contributed to the virtual elimination of the FDIC’s ability for proper enforcement through the paring of some 75 percent of their workforce.
It is frightening to imagine the “Oops” moments that could be added to the list should Mr. Summers be allowed to continue past behaviors as chair of the Fed during a crucial period for the country and the world. Then again, by his count, there may be none to begin with.
Contributors
