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The idea that Barack Obama would still consider appointing Lawrence Summers to head the Federal Reserve rather than order an investigation into this former White House official's Wall Street payments, reported Friday by the Wall Street Journal, mocks the president's claimed concern for the disappearing middle class. Summers is in large measure responsible for that dismal outcome, and twice now, after top level economic postings in both the Clinton and Obama administrations, he has returned to gorge himself at the Wall Street trough.

As Clinton's Treasury secretary, he pushed for radical deregulation allowing investment bankers to take wild risks with the federally insured deposits of ordinary folks, a disastrous move compounded when he successfully urged Congress to pass legislation banning the effective regulation of the tens of trillions in derivatives that often proved to be toxic.

The first direct result of those new laws was the mammoth merger that created Citigroup. Eight years later, the federal government had to save Citigroup from bankruptcy brought on by its leading role in the sale of those toxic mortgage-based derivatives, to the tune of $45 billion in taxpayer funds and backing $300 billion of the bank's bad paper...

...That's because Obama, following Summers' advice, adopted the save-the-bankers-first philosophy of his predecessor, with outrageous publicly funded bailouts of the same financial conglomerates that had put the economy into a deep tailspin. It is a policy that continues to this day, with an outlay of $85 billion a month by the Federal Reserve to purchase toxic assets from the banks' books in the hopes that they will reinvest that largess. But as the president's jobs critique noted, they haven't.

Trillions have been passed on to the banks to relieve them of the burden of the toxic derivatives they created, derivatives that then-Treasury Secretary Summers testified to Congress were no threat to the "thriving market" that "has assumed a major role in our own economy and become a magnet for derivative business from around the world." No threat there because, "given the nature of the underlying assets involved ... there would seem to be little scope for market manipulation. ... "

This is an idiotic statement by someone Obama considers brilliant, or as the president put it when Summers left the White House in September 2010 to get back into the big money game: "I will always be grateful that at a time of great peril for our country, a man of Larry's brilliance, experience and judgment was willing to answer the call and lead our economic team."

Baldy wrote:Your typical neo-Keynesian Academic Economist. He and Obama are made for each other.

kalm wrote:

Baldy wrote:Your typical neo-Keynesian Academic Economist. He and Obama are made for each other.

And Wall Street, and Greenspan, and Rubin....

CitadelGrad wrote:Obama will nominate whomever he is told to nominate. You don't really think the international banking cartel will leave it up to a dumbass like Obama, do you?

Ivytalk wrote:Whatever happened to Janet Yellen?

CitadelGrad wrote:

Ivytalk wrote:Whatever happened to Janet Yellen?

She's hanging out in the background. She doesn't have the notoriety that Summers has, and at the moment is less controversial than Summers. She's still very much in the running for the Fed chairmanship. Soros hasn't yet made his decision.

Baldy wrote:

kalm wrote:
And Wall Street, and Greenspan, and Rubin....

Not exactly. During Summers tenure, four new regulations on the financial industry were imposed for every one regulation lifted. Not all regulations are created equal, but don't fool yourself and think Summers is some sort of laissez-faire zealot. As I said earlier, he is your typical neo-Keynesian academic who doesn't know the difference between politics and policy.

The contrasts between the two leading candidates are stark. Larry Summers epitomizes the Wall Street boys’ club, and has time and time again proven himself wrong. Yellen, on the other hand, has excelled in her duties, offered prescient views on risks to markets, and works well with others. She also would be a historic nominee if she were to break the glass ceiling at the Fed.

The choice for Federal Reserve chair is with President Obama. He can side with the Wall Street protectors—Summers, Tim Geithner and Robert Rubin—who were chiefly responsible for Wall Street deregulation, followed by Wall Street bailouts. Or he can side with the American people.

kalm wrote:

Baldy wrote: Not exactly. During Summers tenure, four new regulations on the financial industry were imposed for every one regulation lifted. Not all regulations are created equal, but don't fool yourself and think Summers is some sort of laissez-faire zealot. As I said earlier, he is your typical neo-Keynesian academic who doesn't know the difference between politics and policy.

And Obama is a progressive too.

The contrasts between the two leading candidates are stark. Larry Summers epitomizes the Wall Street boys’ club, and has time and time again proven himself wrong. Yellen, on the other hand, has excelled in her duties, offered prescient views on risks to markets, and works well with others. She also would be a historic nominee if she were to break the glass ceiling at the Fed.

The choice for Federal Reserve chair is with President Obama. He can side with the Wall Street protectors—Summers, Tim Geithner and Robert Rubin—who were chiefly responsible for Wall Street deregulation, followed by Wall Street bailouts. Or he can side with the American people.

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CitadelGrad wrote:I wouldn't mind seeing Volcker back at the Fed. He's already been **** once by Obama, so he probably doesn't want to find himself vulnerable to another Obama ****.