Larry Summers: Dodd's Financial Reform Bill Prevents 'Too Big To Fail'
From This Week with Jake Tapper, an interview with Obama economic advisor Larry Summers:
TAPPER: OK. The president has said he wants -- in the next few weeks, he wants the Senate to pass financial regulatory reform. First of all, just quickly, do you guys have the 60 votes to pass Senator Chris Dodd's bill on financial regulatory reform?
SUMMERS: I expect that reform is going to pass. It's not easy. You've got $1 million being spent per congressman in lobbying expenses on this issue. Industry has four lobbyists per member of the House and Senate working on this.
But the case for basic consumer protection, the case for regulating institutions that are able to bring the economy down and not leaving them completely unregulated, the case that we've got to be able to handle the failure of an institution without a major bailout through so-called resolution authority, the case that we can't let institutions choose their own regulator -- play one regulator off -- against another to reduce standards -- that case is so compelling that we are confident that a sufficient majority will see that case and will vote to support financial reform.
We've come a -- we've come a -- come a long way on this issue. We're now in the final stages. Our expectation is that we will get there, and there's no question, I mean, how can anyone take a position after what has happened, after -- I mean, it's not the first thing that's happened...
TAPPER: Well, some -- some -- some Democrats...
SUMMERS: ... that we don't need -- that we don't need comprehensive financial reform.
TAPPER: Well, some...
SUMMERS: Probably (ph) work on the details, but not compromise on the principles.
TAPPER: Some Democrats say it doesn't go far enough. Here's Delaware Democrat Ted Kaufman talking about the Dodd bill.
(BEGIN VIDEO CLIP)
KAUFMAN: Unless Congress breaks up the mega-banks that are too big to fail, the American taxpayer will remain the ultimate guarantor of an almost certain to repeat itself cycle of boom, bust and bailout.
(END VIDEO CLIP)
TAPPER: Senator Kaufman is saying that there isn't being -- enough being done about too big to fail. In 2000, you said, quote, "It is certain that a healthy financial system cannot be built on the expectation of bailouts." Can you honestly say that the Dodd bill changes that?
SUMMERS: Yes, I can. It changes -- it reduces the expectation of bailouts by insisting that institutions have much more capital so they won't need to be bailed out. It eliminates the prospect of bailout by creating a framework in which a failure can be managed with creditors taking responsibility.
It restricts -- and this was the important point that former Fed Chairman Paul Volcker has stressed -- it restricts the so-called proprietary trading activities, some of the most risky activities of these institutions. So, yes, this bill is a direct attack on too large to fail by making failure a possibility, as it has to be in a market system, and by making these institutions much safer and much sounder. Senator Kaufman is exactly right.
Hmmmm.... no mention that TBTF = too big, period.
No mention that Blanche Lincoln's Ag committee will be key to regulating derivatives?
No mention that we need to work with other nations to create global regulatory structures?
No mention that we need to regulate and restrict the creation of credit, as well as 'capital'?
No mention that actually the Sen does not actually need 60 votes in all phases of getting reform?
I can't wait to see what Robert Reich, Paul Krugman, Yves Smith, and Simon Johnson have to say about this nonsense.
Oh, and Dylan Ratigan.
Popcorn time!!
Of course he didn't mention derivatives. If he did, he would have to finally apologize to Brooksley Born.
And admit that she was right, and he was wrong.
Edited to add: I also listen to Joseph Stiglitz. He recently was on Charlie Rose. Would be an awesome interview if Charlie would STFU, but Mr. Stiglitz is great.
I pledge allegiance to the Constitution of the United States of America, and to the republic which it established, one nation from many peoples, promising liberty and justice for all
(Excerpt from Central Jersey.com)
http://centraljersey.com/articles/2010/03/25/...
"Real reform also would have placed severe restrictions on the derivatives market. Instead, as columnist Robert Scheer pointed out last week on Truthdig, a liberal news Web site, the Dodd bill fails “to fully come to grips with the enduring threat of unregulated derivatives.”
The “out-of-control derivatives market,” created with the passage of legislation supported by Sen. Dodd a decade ago, grew from what now seems like a modest $91 trillion in 1998 to $592 trillion in 2008,” Mr. Scheer writes. “The current figure,” he adds, “is $605 trillion and still growing.”
The danger posed by derivatives — the slicing and dicing and repackaging of loans to obscure their risk — has become painfully clear, Mr. Scheer points out.
Warren Buffett wasn’t kidding when he called them ‘financial weapons of mass destruction,’ and by now most Americans are aware that the innocuous-sounding derivatives that he was referring to have done great damage to our way of life,” he wrote. “It extends from foreclosed homes in Florida that are collected in collateralized debt obligations to credit default swaps on Greek airport revenue, and, as The New York Times reported Monday (March 15), massive corporate collateralized loan obligations that are ‘a potential financial doomsday.’”
"The US has an army of 90,000 soldiers in Afghanistan and is spending $100bn a year, but has still been unable to defeat 20,000-25,000 Taliban who receive no pay at all." - Patrick Cockburn
has got to be the most boring interview guest there is. I can never remember one thing he's said after the show. I think that's intentional.
Dr. Christine Romers at least sounds upbeat, she reminds one of your favorite aunt. I'm watching her on MTP on MSNBC.
Until you respect the citizenship of those with which you disagree, you're not a true American.
I concur. Kinda hard to get all pissed off at a person who can't maintain one's interest through a sentence.
"Parachutes are allowed in checked or carry-on baggage, but may not be worn in flight."
---Southwest Airlines
Can't maintain interest when one's sentence is 5 minutes long or even remember where the hell he started. Throw the bum OUT!!!
If they don't break these down to their smallest parts it is a waste of time!
republicanism/conservatism is a mental illness!
disabled. I know some who are normal human beings and I like them, but they have been bamboozled by the circle talking, I am totally smarter than thou types, who crap all over everybody but themselves.
Financial reform my ass, Chris Dodd expanded the FED's power. Max talks about at the end of his video with Huffington Post's Ryan Grim
Keiser Report, 01 April, 2010
http://rt.com/About_Us/Programmes/Keiser_Repo...
Goodnight, Frau Blücher
.
Q U E S T I O N:
If these institutions were TOO BIG TO FAIL...
... WHY DID THEY?
.
Starve the WAR Beast...
... Feed Americans.
TBTF does not mean too big to be wrong, it means too big to have to pay the consequences of being wrong (i.e., bankruptcy).
Is BofA bankrupt? Goldman Sachs? Morgan Stanley? Citibank? Wells Fargo? Only one institution was allowed to fail, and that was Lehman Brothers (Bear Sterns was sold off before it went bankrupt, as was Merrill Lynch).
Now it means "too big to be allowed to fail", which is all the more reason we need to prevent them. Or we can get used to the choice of taxpayer bailouts or watch them collapse and make our already terrible economy much worse when they screw up again.
n/t
Since his years working for Reagan, Summers has been wrong about every major international issue. He was a failure as President of Harvard...resigning in 2006 after a no-confidence vote by university faculty. He is a lifelong Neo-Con, endorsing regime change in just about any country where there is brown-skinned people.
There is zero evidence of his alleged economic brilliance - particularly given his losing $3.5 billion of Harvard donations via interest rate swaps which were reported last year.
His policies - endorsed by Greenspan - led directly to the Tech bubble, the 2001 recession, the housing bubble and the current recession.
So whatever he says about the Dodd bill disregard as just the Same-ol'-Same ol Larry Summers bullshit.
Here's another way of keeping them from getting too big:
http://www.youtube.com/watch?v=tn49iMUs3EU
(Starting around 4:00).
Diabolus est Deus Inversus
Summers knows better than the guy who wrote the bill?
Why anyone pays much attention to Summers when he's a sexist pig is beyond me.
You think I've forgotten his comments from when he was the president of Harvard? Fuck no. I'm not going to forget them, and my fellow women of the scientific, mathematical, and engineering community aren't going to forget them.
The economy was a subject on CNN April 1, 2010. Of course they were saying that Obama now owns the economy… or they were saying that it is starting to be perceived that Obama is starting to own the economy thereby pushing the meme that Obama owns the economy. That’s how they do it. They take an idea and then make it reality by saying it is or could be becoming reality.
By coincidence on 4/1/2010, when Obama was talking in Maine I was thinking he has to start educating people about the economy much better than he has been. He and his people have to start telling people what the deal is. For example; Obama should have been saying that Bush screwed up the economy and it is very very difficult to turn it around. Obama should have said the Republicans would have you believe that if Obama just cut taxes (for the rich) all would be good (This is what the Fox “panel” said on Sunday 4/4/2010. Cut taxes for the corporations.). Obama should say that Bush cutting taxes for the rich in 2003 is a big reason why we are in the shape we are in today. Unpaid for tax cuts. Obama and his people should say that Obama would cut taxes (for the rich like the Republicans want) if he thought that it would fix the economy but the experts that Obama and his people listen to, the best economists in the world who actually care about the economy and not about making rich people richer, say that what Obama is doing is what it will take to make the economy better and that tax cuts for the rich will not improve the economy. He should point out that tax cuts for the rich will only make the rich richer.
The problem is that you can’t turn around the economy by flipping a switch and that it is going to take at least ten years (or eight or five or whatever they think the truth is) to get things correct. He has to tell everybody that this is the reason why letting the economy get so screwed up is so horrible. Obama should say that trying to make your friends richer by cutting taxes did and always will weaken the economy. That you just can’t turn it around simply or fast and that this bad economy is Bush’s fault. Just like the economy was Clinton’s doing toward the end of Clinton’s presidency when he had surpluses. It took Clinton 6 years to turn the economy around from what Reagan and Old Man Bush did.
Obama has to educate as many people as he can that a screwed up economy can not be turned around overnight and give simple examples of how it works. The Republicans act as if Obama would just flip a switch (cut taxes for the rich) all would be well and they do this disingenuously and lie. They make it sound so easy and most people can’t grasp how complicated it is unless they are made to understand with simple talk and examples. Obama has to do this soon because it will get to be too late into the election cycle and it will be more difficult to teach people who will believe that Obama is not doing anything because they are still out of work and see no help. These people will believe the Republicans and Fox news because there is nobody telling them how it really works.
1. ALL TV "news" MEDIA sucks to high heaven. It is not real news. It is spin and opinion made by the OPINION GOD. Not to be trusted, EVER!!!
2. George Bush, corporate profiteering crook, screwed up the economy overnight, so, why should it take forever to fix it? They stole our retirement money, they stole our homes, they stole our jobs. Just FIX THE ECONOMY! and put the CROOKS IN JAIL!!!!!
summers: one of the chief architects of the Great Recession. this fuckhead should not be doing interviews, he shouldn't be a trusted adviser to anyone on anything, he should be filing for unemployment compensation right now.
oh, and he's a sexist.
quite the package
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