Larry Summers Wants Banks to Do Him a Solid and Allow Themselves to be Regulated
You read that headline correctly. Big, greasy, constantly nodding off Larry Summers insists that banks should be cool with regulation, pretty please with a cherry on top?
I had to re-read this about 17 times and am still baffled. Did this motherfucker just say that? He did.
White House senior economic adviser Lawrence Summers challenged U.S. financial institutions Friday to think about what they can do for their country by stepping up and accepting the regulations imposed upon them in the wake of the largest financial crisis since the Great Depression.
"Financial institutions that have benefited from government support can, should and must use this moment to think about what they can do for their country -- by accepting the necessary regulation to protect the American people," Summers said in remarks prepared for delivery at the Economist's Buttonwood Gathering in New York. "There is no financial institution that exists today that is not the direct or indirect beneficiary of trillions of dollars of taxpayer support for the financial system."
"The time has come for fundamental change in the financial sector of our economy -- both in how financial institutions conduct their business and how they are regulated," Summers said.
Well wait here just a second. Since when do we ask banks to play nicely? Maybe since our shitty investments fucked Harvard, Larry?
Harvard University’s failed bet that interest rates would rise cost the world’s richest school at least $500 million in payments to escape derivatives that backfired.
Harvard paid $497.6 million to investment banks during the fiscal year ended June 30 to get out of $1.1 billion of interest-rate swaps intended to hedge variable-rate debt for capital projects, the school’s annual report said. The university in Cambridge, Massachusetts, said it also agreed to pay $425 million over 30 to 40 years to offset an additional $764 million in swaps.
The transactions began losing value last year as central banks slashed benchmark lending rates, forcing the university to post collateral with lenders, said Daniel Shore, Harvard’s chief financial officer. Some agreements require that the parties post collateral if there are significant changes in interest rates.
“When we went into the fall, we had some serious liquidity management issues we were dealing with and the collateral postings on the swaps was one,” Shore said in an interview yesterday. “In evaluating our liquidity position, we wanted to get some stability and some safety.”
Harvard sold $2.5 billion in bonds in the fiscal year, in part to pay for the swap exit, even as the school’s endowment recorded its biggest loss in 40 years, the report released yesterday said. This is the first time the university has detailed the cost of exiting its swaps.
“Substantial losses” in Harvard’s General Operating Account, a pool of cash from which bills are paid, further put pressure on the school, the report said. The net asset value of the account fell to $3.7 billion from $6.6 billion during the fiscal year, according to the report.
Harvard has typically invested a large portion of this operating account alongside the endowment, generating “significant positive investment results,” the report said. This year, the endowment’s losses hurt Harvard’s cash, according to the report.
The annual report provides new details on Harvard’s derivative-related losses. Many were entered into in 2004, said Harvard spokeswoman Christine Heenan. Lawrence Summers, director of President Barack Obama’s National Economic Council, was the university’s president at the time. White House spokesman Matthew Vogel declined to comment.
Oh shit, Larry! You really fucked that one up, didn't you? I can totally see why A) OMGObama would find you to be a perfect fit for his administration because OMG you're like a money genius! and B) You would be asking banks nicely instead of forcing your big greasy bitchslap hand against them.
Is there anyone left in charge of our financial system with the large, low-hanging pair of balls we need to get us out of this mess? Because it certainly isn't you, Larry.
As always, the best part is the comments (MW):
"There is no financial institution that exists today that is not the direct or indirect beneficiary of trillions of dollars of taxpayer support for the financial system."
Except for Central Banks, they can care less about you, your taxes, and your governments.
That is where you should be working .
Benefits of Government without oversight.
Benefits of the Private Sector without competition.
Well wait a minute, could Summers be on to something?
In calling for financial-services companies to accept new regulations, Summers said bank executives and other financial-industry managers should consider the recent financial crisis within the context of a broader set of crises that have occurred in recent years, including the Latin American debt crisis, the 1987 stock-market crash, the savings-and-loan debacle, the Mexican financial crisis, the Asian financial crisis, the collapse of Long Term Capital Management and the bursting of the dot-com bubble.
"[We have] one crisis every three years," Summers said. "Surely a system that produces this many accidents and accidents this severe is a system that is in very much need of reform."
He's right! Kill the Fed!
In what sort of confused world do we let losers like this run our financial system and central banks devalue our currency 95%+ in less than 100 years? If you're old enough, the dollar you had when the Fed was born only buys a nickel worth of goods - a nickel! What the hell can you buy with that? Larry Summers certainly can't get a bag of cheeseburgers for that.