Summers to Join Obama White House, Boosts Fed Chances

http://www.bloomberg.com/apps/news?pid=20601068&sid=aBHndiiKQ3lM&refer=home

By Brendan Murray and Michael McKee

"Harvard University professor Lawrence Summers will join the Obama administration with a ready-made sales pitch for substantial economic stimulus and a chance that the role springboards him to the Federal Reserve.

Summers, 53, was Bill Clinton's last Treasury secretary. He will have a wide-ranging portfolio and help craft Obama's economic policies, a Democratic aide said. Summers's appointment, along with the nomination of Federal Reserve Bank of New York President Timothy Geithner to be the next Treasury secretary, will be announced Nov. 24, the aide said.

The return of Summers to Washington after eight years at Harvard gives President-elect Barack Obama a fierce advocate for fiscal stimulus to revive the economy. It also positions him to succeed Fed Chairman Ben S. Bernanke, whose term at the helm of the central bank expires in January 2010, said Vincent Reinhart, former director of the Fed's Division of Monetary Affairs.

``He's certainly on the short list, and perhaps on the top,'' said Reinhart, a resident scholar at the American Enterprise Institute in Washington..."

from informed posts I've read here.

He never promised that all Democrats would love or approve everything he did, or choices he made.

This is what I'm talking about.

worth reading IMO.

The Woman Greenspan, Rubin & Summers Silenced

http://www.thenation.com/blogs/edcut/370925/the_woman_greenspan_rubin_summers_silenced

"...What these "three marketeers" --as they were called in a 1999 Time magazine cover story--were adept at was peddling the timebombs at the heart of this complex crisis: exotic and opaque financial instruments known as derivatives--contracts intended to hedge against risk and whose values are derived from underlying assets. To cut to the quick, Greenspan, Rubin and Summers opposed regulating them. "Proposals to bring even minimalist regulation were basically rebuffed by Greenspan and various people in the Treasury," recalls Alan Blinder, a former Federal Reserve board member and economist at Princeton University, in the Times article...

..."Despite that event," the Times reports, " Congress (apparently as a result of Greenspan & Summer's urging, influence-peddling and pressure) "froze" Born's Commissions' regulatory authority. The next year, Born left as head of the Commission.Born did not talk to the Times for their article.

What emerges is a story of reckless, willful and arrogant action and behaviour designed to undermine a wise woman's good judgment. The three marketeers' disdain for modest regulation of new and risky financial instruments reveals a faith-based fundamentalist approach to the management of markets and risk. If there is any accountability left in our system, Greenspan, Rubin and Summers should not be telling anyone how to run anything. Instead, Barack Obama might do well to bring back Brooksley Born and promote to his team economists who haven't contributed to the ugly mess we're in."




Timothy Geithner, President and Chief Executive Officer

March 23, 2007

http://www.newyorkfed.org/newsevents/speeches/2007/gei070323.html

"The latest wave of credit market innovations has elicited some concerns about their implications for the stability of the financial system, concerns similar to those associated with earlier periods of rapid change in financial markets. Will the most recent credit market innovations amplify credit cycles, contributing to "excessive" lending in times of relative stability, and then magnify the contraction in credit that follows? Will they introduce greater volatility in financial markets? Will they create greater risk of systemic financial crisis?

These concerns have been heightened in some quarters by the problems currently being experienced in the subprime mortgage sector. It will take some time before the full implications are understood and the full impact can be assessed. As of now, though, there are few signs that the disruptions in this one sector of the credit markets will have a lasting impact on credit markets as a whole...

By spreading risk more broadly, providing opportunities to manage and hedge risk, and making it possible to trade and price credit risk, credit market innovation should help make markets both more efficient and more resilient...

...In general, there does not seem to be strong empirical support for the proposition that derivatives increase volatility in financial markets. Volatility is not higher where derivatives are most prevalent..."

:toast: