Robert Scheer | Truthdig | Posted on Nov 6, 2008
Barack Obama is rumored to favor Lawrence Summers as his treasury secretary. That’s a terrible choice, says Robert Scheer, if the president-elect is at all concerned about the financial meltdown.
Truthdig: Today on the Truthdig podcast, Truthdig editor Robert Scheer explains why the man rumored to be Barack Obama’s choice for treasury secretary would be a huge mistake. The frontrunner who has emerged for Barack Obama’s treasury secretary is rumored to be a man named Larry Summers, who was the treasury secretary under Bill Clinton. Tell us why you think that would be a terrible mistake?
Robert Scheer: Lawrence Summers is as responsible as anyone for the current economic meltdown. He was Robert Rubin’s protege in the Treasury Department, and he became secretary of treasury after Rubin, who had come from Goldman Sachs to be Clinton’s secretary of treasury, went off to CitiGroup—which was the first company from the kind of deregulation pushed through under Clinton. Summers was the secretary of treasury that got Clinton to sign off onto the two most egregious pieces of legislation that permitted the financial meltdown. This was legislation carried by Phil Gramm, the Republican senator who was head of the Banking Committee, and his name is one of them, it’s called the Gramm-Leach-Bliley Act, or otherwise known as the Financial Services Modernization Act—that was in 1999. And in 2000, as a lame duck, the Clinton administration approved after Congress passed again at Graham’s insistence, something called the Commodity Futures Modernization Act. These two pieces of legislation allowed the current meltdown. They allowed the commercial banks, investment banks, stockbrokers and insurance companies to merge. That’s why you have this problem of AIG buying these phony toxic securities and everything. And it did not have any degree of transparency, it allowed them to merge their data, it allowed them to merge their activities. And the Commodity Futures Modernization Act said that all these new-fangled financial instruments that they developed, the hybrid instruments, the credit swaps and so forth, were automatically freed form any government regulation or any… were not covered by any pre-existing regulatory legislation. It’s those instruments that have gotten us into this problem. We don’t know what they’re worth. Taxpayers are now being forced to buy them. And that’s the heart of the whole thing. And it was Lawrence Summers who was secretary of the treasury, who in 1999-2000, urged Clinton successfully to sign off on those two pieces of legislation. It’s now admitted that they didn’t even known what was in them. That it had not been vetted, there had not been hearings in Congress on the Commodity Futures Modernization Act, and so Lawrence Summers has got his fingerprints all over these things. He assured the president, he assured everyone else, that this was a very good thing to do, but what in effect did, was end the regulatory regime that had been put place under Franklin Deleano Roosevelt during the Great Depression to prevent such a meltdown. So the idea that you would now reward Lawrence Summers for having gotten us into this mess by making him secretary of the treasury, and in an administration that has been elected to promise change and go back to this retread, go back to this guy who helped get us into this mess, is mind-boggling. Continue reading ‘Obama’s Treasury Secretary? Let’s Hope Not’