George Washington’s Blog Wednesday, Feb 11, 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-three-to-one fractional reserve banking margins
- Ensuring that derivatives were not regulated
- 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”
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.