Tuesday, February 10, 2009
Lawrence Summers is the head of Obama's National Economic Council, and as such oversees much of Obama's economic policy.
Summers has a reputation in developing countries for being a nasty guy, having said - as chief economist for the World Bank - that third world countries were "underpolluted".
But more importantly, Summers is the guy responsible for:
- Allowing the banks to carry extraordinary levels of debt, thirty-to-one fractional reserve banking margins
- Repealing New Deal era legislation which separated investment banks from commercial banks, insurers and stock brokers, and which kept companies from becoming "too big to fail"
As a 1999 New York Times article entitled "Congress Passes Wide-Ranging Bill Easing Bank Laws" quotes Summers as saying:
''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,'' Treasury Secretary Lawrence H. Summers said. ''This historic legislation will better enable American companies to compete in the new economy.''
In other words, Summers is one of the main guys who got us into this mess. Expecting him to really shake up the financial system is like asking the fox to guard the henhouse.