The Case Against Larry Summers

[Jesus Malverde]

The Federal Reserve chairman wields such enormous power, with so little accountability, that he or she is said to be the second-most-powerful person in government after the president. Decisions are habitually made in secret. The job requires a person of great personal tact, subtlety, and self-control. It requires someone who knows how to build consensus at the highest levels for the right kind of policies—someone who possesses the maturity and character to admit error and shift course when needed.
But, according to numerous accounts from those who have worked with him, Summers has often displayed the opposite attributes during his long career. Behind the scenes, he has used his power, combined with intellectual arrogance, to bully opponents into silence, even when they have been proved right. He has refused to allow his dissenters a voice at the table and adopted a policy of never admitting errors.

And Summers has made a lot of errors in the past 20 years, despite the eminence of his research. As a government official, he helped author a series of ultimately disastrous or wrongheaded policies, from his big deregulatory moves as a Clinton administration apparatchik to his too-tepid response to the Great Recession as Obama's chief economic adviser. Summers pushed a stimulus that was too meek, and, along with his chief ally, Treasury Secretary Timothy Geithner, he helped to ensure that millions of desperate mortgage-holders would stay underwater by failing to support a "cramdown" that would have allowed federal bankruptcy judges to have banks reduce mortgage balances, cut interest rates, and lengthen the terms of loans. At the same time, he supported every bailout of financial firms. All of this has left the economy still in the doldrums, five years after Lehman Brothers' 2008 collapse, and hurt the middle class. Yet in no instance has Summers ever been known to publicly acknowledge a mistake.

Wielded by a Fed chairman, those personal traits and policy attitudes are a potentially combustible mix at a time when the Federal Reserve has become, more than ever, the most powerful economic institution on earth, and when re-regulation of the global financial system is substantially in the hands of the Fed. The man whom Summers once considered a model chairman, Alan Greenspan, offers an example of the dangers of being too certain of one's views without much accountability. Back in 1994, Congress instructed the Fed to police unfair and deceptive practices related to mortgage loans. But because the chairman believed in minimal regulation, no rules were ever written; Greenspan quietly slapped down efforts by governors such as Ed Gramlich to warn him; and the Fed did little to intervene in the emerging subprime fraud.

There is no question about Summers's intellect and experience. But would he have the character, temperament, and maturity to listen to a naysayer enough to admit error and reverse course in the next crisis? His history suggests otherwise.

http://finance.yahoo.com/news/case-against-larry-summers-150800434.html

[Guy Whitey Corngood]

1. I love the constant feigning of ignorance. Or maybe it's not feigned at all. "I mean it's

not like he tortured kittens before eating them alive. Back off people!!!!"

[treestar]

2. Don't all government positions require that the person be able to

build consensus for the right policies? Which are the right policies?

Was Greenspan a disaster in this position? How so? Bernanke? How so? Surely they did wrong too.

I'm thinking there is no one who can do this job. Maybe Elizabeth Warren? Who does she think should have the job and what would she do if Summers got it?

[trumad]

3. Wrong?

How about cratering the economy? Jesus---

[treestar]

4. He's responsible for cratering the economy?

Really? Clinton's Secretary of the Treasury? And not Bush?

[trumad]

10. he's one of the main architects

[treestar]

11. of what? And under Clinton?

And it gives Bush a pass? What is it?

[trumad]

17. I'm not giving anyone a pass

I'm just stating a fact.

You do know that Summers was instrumental with the financial deregulation?

[treestar]

25. Now I do

But Clinton went along with it. If a bill passed in 1998, Clinton signed it.

We don't have any proof that putting Summers into any office would mean Obama would sign some de-regulating legislation.

I think someone else should get the job at this point but if Obama puts Summers in there, I may not like it, but it's not priority #1.

[Bluenorthwest]

5. Can you state an actual postive case for why Summers would be the best choice?

Out of well over 300 million Americans, why Summers? If you can't answer that, you don't really have an opinion at all.

[treestar]

7. No. But the abject hatred here

is a little strange. I've skimmed his wiki page and while he has his screw ups I am not seeing why it would be the end of the world. Fed Chairman isn't a position I follow with great scrutiny and probably most people don't. Yet it seems DU is being set up for a melt down over it.

[Bluenorthwest]

13. But 'abject hatred' is just your hyperbolic characterization. To say 'should not

Chair the Federal Reserve' is not abject hate. I should not head the Fed. I love me.
Here's the situation, some people oppose Summers for reasons they are stating. You support him, but you don't have any idea why. So you lash out at others and say 'hate' because hate is an easy word for comfy protected folks to toss around. They don't know what it really means. So they use it constantly. To describe any opinion that is not their own. It is self indulgent bullshit from people who do not face hate in the real world.
You once made a post saying that there is only one right gay people don't have, when in truth LGBT people can be legally discriminated against in 29 States, most of the US. That discrimination is based in hate. Saying someone else should chair the fed is not the same as saying 'we don't rent to you people'. But here you are, a person who apparently was not even aware of the actual hate infesting this nation motivated to pitch woo for a guy who you don't even know about. Freaky ass stuff in my book.

[treestar]

14. I knew you'd work your one issue into this

I am not supporting him, but looking for the reasons I am supposed to hate him so much.

This has nothing to do with gay rights.

[Bluenorthwest]

15. I'm talking about things YOU have said and comparing them to what YOU

are saying. I am criticizing you for flinging the word 'hate' at people for not supporting Summers when you posted on DU that gay people lack only one right, which is not true and which does have to do with actual hate. Your abuse of the term is aggressive, unwarranted and reduces the word to a chew toy for political poodles.
The issue is abusive language hurled. The issue I am addressing is the intellectual vapidity of your posts on both subjects. You do not know the facts, but you pontificate anyway. 'Gay people have plenty of rights' or 'The abject hate surprises me' are both the same sort of rhetorical attack mechanism. It sucks. It is mean, it degrades the discussion and when directly asked to make a positive case instead of a negative attack on other people's ethics, you fail for lack of knowledge. It is not ok to claim untrue things or make crappy remarks about others just to cover up your own lack of knowledge. You don't know about Summers, you don't know about LGBT rights laws but you spout off about any and every subject with vitriol and accusations, always in the negative. It's just not ok to claim other people are engaging in 'abject hate' just to have something to pout about. It's disgusting. It's not how people treat each other in real life, for a good reason. It is uncouth, ignorant and there is no excuse for it at all.

[trumad]

18. Amazing eh?

Hate?

I don't know the man...so I don't hate him.

I do know quite a bit about his economic history...and I do hate that.

[Bluenorthwest]

19. Not just hate, but 'abject hate' and the gasp that it surprises her, this abject

hate. I'm so sick of that word being thrown around when it does not apply. It is a disservice to the victims of actual hate all over the world.

[trumad]

21. She really does not her history to the financial meltdown.

It's a fascinating story...

[treestar]

24. Most people probably wildly disagree about the financial meltdown

But you're taking the position the Clinton administration caused it.

Why did Clinton go along with this stuff? I would think you'd have been opposed to all he did at that time, too. In fact, he signed several bills that should make him look considerably to the right of Obama.

Also Bush came along and presumably did far more to cause this meltdown.

[Maven]

22. Oh there's the 'H' word

Starting early eh? Have to make sure all dissenters look irrational from the outset.

[QC]

27. Well, dissenters are considered mentally ill in these parts now

(deranged) just like in the old Soviet Union, where people who failed to see the benefits of Stalinism were sent to insane asylums on the ground that they must surely be crazy.

[leftstreet]

6. He's been 'building consensus' against the peons for years

He's had his filthy hands on shitty legislation since Clinton deregulated the financial markets, all the way up to opposing bankruptcy modifications

He sucks

[treestar]

8. What legislation and what bankruptcy modifications?

How do we even know what those issues are? I see we are intended to swallow the idea whole that he's bad and yet another reason to throw Obama under the bus, and this is being set up. Just in case Obama picks him.

[leftstreet]

9. You defend him, but know nothing about him?

LOL

Start by reading the OP

Then try Google

[treestar]

12. I don't pretend to know everything, as you do

So I can't defend him.

But I also can't condemn him. And you aren't convincing. It just seems that we just swallow this idea whole - talk about requiring others to follow in lock step.

Here's I've at least found something for you:

As Treasury Secretary, Summers led the Clinton Administration's opposition to tax cuts proposed by the Republican Congress in 1999.[16] Also during his stint in the Clinton Administration, Summers was successful in pushing for capital gains tax cuts.[citation needed] During the California energy crisis of 2000, then-Treasury Secretary Summers teamed with Alan Greenspan and Enron executive Kenneth Lay to lecture California Governor Gray Davis on the causes of the crisis, explaining that the problem was excessive government regulation.[17] Under the advice of Kenneth Lay, Summers urged Davis to relax California's environmental standards in order to reassure the markets.[18]
Summers hailed the Gramm-Leach-Bliley Act in 1999, which lifted more than six decades of restrictions against banks offering commercial banking, insurance, and investment services (by repealing key provisions in the 1933 Glass–Steagall Act): "Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century," Summers said.[19] "This historic legislation will better enable American companies to compete in the new economy."[19] Many critics, including President Barack Obama, have suggested the 2007 subprime mortgage financial crisis was caused by the partial repeal of the 1933 Glass–Steagall Act.[20] Indeed, as a member of President Clinton's Working Group on Financial Markets, Summers, along with U.S. Securities and Exchange Commission (SEC) Chairman Arthur Levitt, Fed Chairman Greenspan, and Secretary Rubin, torpedoed an effort to regulate the derivatives that many blame for bringing the financial market down in Fall 2008.[21]

http://en.wikipedia.org/wiki/Lawrence_Summers

Certainly sounds like a conservative on economics.

[questionseverything]

16. end game

http://www.truthdig.com/eartotheground/item/larry_summers_and_the_end-game_memo_20130825/


The year was 1997. US Treasury Secretary Robert Rubin was pushing hard to de-regulate banks. That required, first, repeal of the Glass-Steagall Act to dismantle the barrier between commercial banks and investment banks. It was like replacing bank vaults with roulette wheels.

Second, the banks wanted the right to play a new high-risk game: “derivatives trading.” JP Morgan alone would soon carry $88 trillion of these pseudo-securities on its books as “assets.”

But their work wouldn’t end there. Prudent financial controllers who wanted to protect their wealth rather than just get rich could simply move their investments to countries with safer banking laws. That would have to be changed. So the leaders of Goldman Sachs, Merrill Lynch, Bank of America, Citibank and Chase Manhattan sought to “eliminate controls on banks in every nation on the planet — in one single move.”

To do this, Palast writes, they used “the Financial Services Agreement, an abstruse and benign addendum to the international trade agreements policed by the World Trade Organization.”

“Until the bankers began their play,” Palast continues, “the WTO agreements dealt simply with trade in goods—that is, my cars for your bananas. The new rules ginned-up by Summers and the banks would force all nations to accept trade in ‘bads’—toxic assets like financial derivatives.”

“Until the bankers’ re-draft of the FSA, each nation controlled and chartered the banks within their own borders. The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives ‘products.’ ”

“And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives.”

The banks then strong-armed the member nations into abandoning their previous trade-in-goods deals by threatening to block international sales of the nations’ key exports. Every single bullied nation signed.

[treestar]

23. From what I've learned today of him

Not from DU but looking elsewhere, I don't like him.

But then Clinton put up with Summers and even signed onto the Glass Steagal repeal, etc.

I'd still support Clinton, though I would not have agreed with that.

Likewise Obama I'd think could find someone else for this job. But disagreeing with him on this issue is not enough to abandon supporting him. I can only wonder who Mittens would have put in the job.

[warrant46]

28. Needs some soap for those

Filthy hands

[cthulu2016]

20. Not this one. This is raw, unilateral, autocratic power.

The Fed chair is called only the second most powerful person because he/she can't order an air-strike, but within his/her scope is more powerful than the president, aside from the commander in cheif role.

If the entire rest of the Fed board votes to raise rates and the Fed chair wants to cut rates, rates are cut.

No concensus required.

Raw power, and independent by design.

[upaloopa]

26. When we all were calling for Roosevelt type responses to the

near depression it was Summers and such ilk that prevented a powerful response. We had the government in our hands. Dems could have made history with programs to put people back to work and to stay in their homes. Instead we spent the time fighting over how weak of a health care bill to put forth.
You want to know why Obama's only legacy will be that he was the first African American President? Larry Summers gets a big chunk of the credit.

[whistler162]

29. or to simplify the thesis....

he exists therefore he is bad!

[Enthusiast]

30. Summers is a horrible choice.

He's the cheerleader for the deregulation that directly caused the economic melt down. He should be ashamed to show his face.