Thursday, August 15, 2013

Reprint Heaven: Banking Reform, Now With 50% More Jowls

Chairman Larry

It's being reported that Larry Summers is on President Obama's Very Short List of candidates to succeed Ben Bernanke as the Chairman of the Federal Reserve banking system.

Reasons in favor, presented by his supporters, are the 'intellectual energy and creativity' which Summers would bring to the role; an ability to "think outside the box".  Plus, Larry has personal connections made after after a life in finance and economics, and at the fringes of politics (Translation:  He's a Player, a BSD).

Other people, not so supportive of Larry, note that he's been at the center of minor scandals, faux pas and 'errors in judgement' during his career; describe his personal demeanor as arrogant and insulting; they remember Summers was a major figure in creating the financial crisis that led to the 2008 Crash.  They don't believe he should be considered as Bernanke's replacement.

But, Larry doesn't really care about any of that, and Obama may not, either.

Summers had been one of the  2008 Obama transition team's principal economic advisors -- Obama was going to shape a comprehensive economic stimulus package that Congress would accept... and which treated the Wall Street BSD's with proper respect.

Bringing Summers in to play fixer between his connections on Wall Street and in Congress to get the stimulus passed was a pragmatic move. When this post was written in April of 2010, Summers was being tapped by Obama to help draft reform of the U.S. banking and investment sector, for much the same reasons.

For more detail on Summers' role in the financial crisis, and why he should not be considered for employment at a Dairy Queen, let alone Fed Chairman, see the 2010 documentary, Inside Job.

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Larry Summers, 2010 Gore Vidal-Look-alike Contest Runner-Up

Every time I see Larry Summers, he looks fatter. It's almost a parody of what being a BSD will get you, or a reverse 'Portrait Of Dorian Grey': Public evidence of a corrupt life worn in his face.

Summers has been over and under and up and down, as the Sinatra song says, but has generally been a King, not a Pawn. He's been one of Harvard's youngest tenured professors; was on the staff of the Council of Economic Advisers under President Reagan from 1982-1983; and was hired as Chief Economist for the World Bank until 1993. 

It was in a 1991 interview that Larry said, 
"There are no... limits to the carrying capacity of the earth that are likely to bind any time in the foreseeable future. There isn't a risk of an apocalypse due to global warming or anything else. The idea that we should put limits on growth because of some natural limit, is a profound error and one that, were it ever to prove influential, would have staggering social costs."
It was at the World Bank that Larry later wrote a 1993 memo, later leaked to the press, in which he said, "the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that . . . I've always thought that under-populated countries in Africa are vastly underpolluted".

Larry claimed the remark was 'sarcasm' and was taken out of context (tough to imagine anyone outside the Koch Brothers, Rick Perry or Lard Boy making such a remark).  But with the World Bank memo, as in so many other reported events in his public life, I don't think Summers cared what anyone thought; Fuck 'em.  Summers has always generated more than a reasonable share of controversy, rooted in what appears an abrasive and arrogant personality. 



Larry served as Deputy Secretary, and later Secretary of the Treasury, during the Clinton administration's second term. Summers was successful in pushing for capital gains tax cuts. During the California energy crisis of 2000 (when the state was struggling to find enough electricity, while companies like SoCal Edison and PG&E claimed California's strict environmental laws around energy production hampered their ability to produce  power), 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. 

They agreed with the power companies, and saw the problem lay in excessive government regulation. Under the advice of Kenneth Lay, Summers urged Davis to reassure 'the markets' by relaxing California's environmental standards around energy production, specifically regarding coal or oil-fired power plants.  

Davis took the advice; California deregulated it's electricity markets.  This directly benefited large-scale power producers -- and directly benefited Lay's company, Enron, by removing any cap on the price of electricity, which is bought and sold in the U.S. like any other commodity.

Remember Enron? A company led, as Federal prosecutions and civil suits later documented, by leeches and criminals? Remember the recorded conversations  between Enron's energy traders, laughing -- because the deregulation Summers and Lay convinced Davis to back allowed Enron to buy California's own electricity, and sell it back to California -- at inflated prices? 

Summers supported the Gramm-Leach-Bliley Act of 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. Summers also pushed heavily for deregulation of the derivatives contracts market.

All of that led directly to the current economic disaster we're experiencing, by the way. Without a firewall to keep banks out of other financial businesses, and investment houses out of the banking business; without regulation of that fundamental change, and without regulation of the derivatives market ...  you end up with a Finance and Investment center that can do almost whatever it wants, followed by a Crash that damages hundreds of millions of lives.

But, they're just Little People, after all; no one Larry has to answer to, so he doesn't have to give it a moment's thought.  But in my opinion, his responsibility in all that happened and for the consequent damage done to the lives of others seems documented and clear.

The Nation's Financial Future Bores Larry: Nothing In It For Him

After "Lil' Boots" Bush was appointed Leader, Larry became President of Harvard -- until forced to resign in 2006, after a series of issues and grievances exploded into a no-confidence vote from a majority of the Harvard faculty.

It seems Summers had made dismissive comments about the value of women in the faculty, had tried to fire an African-American professor for spending time working on a particular Democrat's presidential candidacy (which Summers didn't support); and, Summers showed favoritism to a visiting instructor because, at least in my opinion, there was an economic benefit for him to do so.

In short, he continued to behave as he had earlier in life; no surprise there. Finally, Larry had to resign.

Now, Larry is the principal member of the Obama Administration's Economic Advisory Council. President Obama is expecting him to work on... reforming the investment and banking industry.

Right.

Summers has recently come under fire for accepting perks from Citigroup, including free rides on its corporate jet in 2008. After the economic stimulus legislation was passed in early 2009, Larry called Senator Chris Dodd and asked him to remove caps on executive pay at firms that received stimulus money, including Citigroup.

Later that year, it was disclosed that Summers has been paid approximately $7.7 million in fees from various Wall Street companies which received government bailout money -- and which, arguably, are affected by government policy he helps to shape as a public servant -- sort of a classic Conflict Of Interest.

What a guy. Thanks for everything, Larry; millions of people are barely treading water -- but you got yours, huh? So I guess it's okay. The interesting thing is, you're two years younger than I am, and man; I look in way better shape.

Hee hee hee hee hee hee. But, then, I'm a Dog, and this means I'm only eight years old in a human timeframe. However, Larry can't bark very well, and possibly spends less time licking potentially embarrasing areas of his body in public.

Mongo In The Early Years

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(There's also this observation about Summers, from October, 2011, during the #Occupy events -- seems like so long ago, now, doesn't it?)

At Media Matters, Ari Rabin-Havt recently posted an article entitled , "We Need A New System", which began with recounting a friend's arrival in Washington, D.C. in 2000 -- eleven years ago, at the height of protests in front of a scheduled meeting of the World Bank.

From the back seat of a taxi, Rabin-Havt's friend saw one of the protestors, a woman, wearing a T-Shirt with the slogan We Need A New System! -- and the friend just happened to attend a dinner party that night, with " 'ambassadors, politicians, esteemed professors and what seemed like the entire combined senior economist staff of the IMF, World Bank and Treasury' ", including Larry Summers.

The friend recounted seeing the woman protesting the World Bank meeting; it turned out Summers had seen her, too -- he'd even spoken with her.
And so I asked the girl [Summers recounted to the other guests]: 'What is this new system that you want? Tell me about it!' And the girl had nothing. Nothing! She had no fucking clue what this magical new system was supposed to be. No one is saying that there aren't problems with the world economy the way it is today. But these kids out there -- they don't know what they want!
Rabin-Havt's friend then said to Summers [emphasis added],
"You've got 50 economics PhDs in this room who pretty much run the world economy. And you're asking that girl for a better system? Aren't the solutions your job? You admit billions are living in hell, but it's up to that girl to fix it?"
Summers chuckled and walked away.