Worrying Aspects of Obama's Administration

A blog entry in Barry Ritholtz's Big Picture points out the source of a lot of worry and concern about Obama's "bank plan". It points to one man: Larry Summers. Read this and you can understand why this guy doesn't have the taxpayer's concerns at heart:

Larry Summers: Wrong Man for the Job
by Barry Ritholtz

I have been wondering why the new administration has continued carrying out the ruinous, misguided policies of the Bush administration when it came to the banks. I simply couldn’t figure out why the hell we were giving away trillions of dollars on absurdly favorable terms to a group of incompetent managers — reckless speculators, really — who destroyed their own companies.

Perhaps this helps shed some light:

“Top White House economic adviser Lawrence Summers received about $5.2 million over the past year in compensation from hedge fund D.E. Shaw, and also received hundreds of thousands of dollars in speaking fees from major financial institutions.

A financial disclosure form released by the White House Friday afternoon shows that Mr. Summers made frequent appearances before Wall Street firms including J.P. Morgan, Citigroup, Goldman Sachs and Lehman Brothers. He also received significant income from Harvard University and from investments, the form shows.

In total, Mr. Summers made a total of about 40 speaking appearances to financial sector firms and other places, with fees totaling about $2.77 million. Fees ranged from $10,000 for a Yale University speech to $135,000 for an appearance paid for by Goldman Sachs & Co.

The disclosure — in a financial report that is required for federal office holders — comes as Mr. Summers is involved in shaping the Obama administration’s policy decisions on the financial meltdown as well as the broader recession. Among the many decisions the economic team has wrestled with has been whether to step up regulation of hedge funds, one of the most contentious subjects during a summit of world leaders this week. European nations pushed for tougher rules, while the Obama administration preferred a less stringent approach.” (emphasis added)

Let’s review: Summers, along with Robert Rubin, pushed for the repeal of Glass Steagall, and supported the Commodity Futures Modernization Act; If memory serves, he was also around during the LTCM bailout.

If the history books eventually judge the Obama administration a failure, they may have to point to one horrific appointment as the root cause of the misguided policies: The “Smart Guy” who decided to continue the “Dumb Guy’s policies.

And that’s not very smart at all . . .


Source:
Hedge Fund Paid Summers $5.2 Million in Past
JOHN D. MCKINNON and T.W. FARNAM
WSJ, APRIL 3, 2009, 11:38 P.M. ET