# Larry Summers' smoking gun: How he, Rubin & Geithner deregulated banks -- GLOBALLY **URL:** \ **Category:** Great Debates\ **Created:** [August 22, 2013, 11:13pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917 "2013-08-22T23:13:59Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [August 23, 2013, 8:38pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/21 "2013-08-23T20:38:53Z")
> [@BrainGlutton](#): > > Clearly they felt they had **something** to hide. There’s nothing in the memo about hiding a log of a phone call. It’s something the blogger made up (it doesn’t even make sense, why would a call from Geitner to Summers generate a log so detailed that it would reveal Geitner telling Summers some phone numbers, and if they were trying to avoid generating a record, why would they exchange a memo?) And you’re dodging the question. What specifically in the memo do you feel was revealed? What should be illegal? What didn’t we know before that we do now? ---
**Author:** ![aNewLeaf](https://avatars.discourse-cdn.com/v4/letter/a/ac91a4/32.png) [@aNewLeaf](https://boards.straightdope.com/u/aNewLeaf)\ **Post date:** [August 23, 2013, 8:42pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/22 "2013-08-23T20:42:52Z")
> [@BrainGlutton](#): > > It’s more in the nature of “There oughta be a law!” Oh. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [August 24, 2013, 12:39am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/23 "2013-08-24T00:39:06Z")
> [@BrainGlutton](#): > > No, only Brazil balked at deregulating derivatives-trading. Of course, a global financial crisis affects every country no matter how or why it started. You are actually claiming that Brazil is the only country in the Western world that has regulations concerning the trading of derivatives? ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [August 24, 2013, 12:44am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/24 "2013-08-24T00:44:48Z")
> [@RickJay](#): > > You are actually claiming that Brazil is the only country in the Western world that has regulations concerning the trading of derivatives? I don’t know about that, but Brazil is the only WTO member out of 156 that did not sign the Financial Services Agreement. > [@](#): > > **Bankers Go Bananas** > > Why in the world would any nation agree to let its banking system be boarded and seized by financial pirates like JP Morgan? > > The answer, in the case of Ecuador, was bananas. Ecuador was truly a banana republic. The yellow fruit was that nation’s life-and-death source of hard currency. If it refused to sign the new FSA, Ecuador could feed its bananas to the monkeys and go back into bankruptcy. Ecuador signed. > > And so on – with every single nation bullied into signing. > > Every nation but one, I should say. Brazil’s new President, Inacio Lula da Silva, refused. In retaliation, Brazil was threatened with a virtual embargo of its products by the European Union’s Trade Commissioner, one Peter Mandelson, according to another confidential memo I got my hands on. But Lula’s r_efusenik_ stance paid off for Brazil which, alone among Western nations, survived and thrived during the 2007-9 bank crisis. > > China signed – but got its pound of flesh in return. It opened its banking sector a crack in return for access and control of the US auto parts and other markets. (Swiftly, two million US jobs shifted to China.) ---
**Author:** ![Indistinguishable](https://avatars.discourse-cdn.com/v4/letter/i/90ced4/32.png) [@Indistinguishable](https://boards.straightdope.com/u/Indistinguishable)\ **Post date:** [August 24, 2013, 1:12am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/25 "2013-08-24T01:12:58Z")
What exactly is so damning in this memo? I can’t see it, and I’m afraid the article has failed to make it clear to me either… ---
**Author:** ![Captain\_Amazing](https://avatars.discourse-cdn.com/v4/letter/c/6de8d8/32.png) [@Captain\_Amazing](https://boards.straightdope.com/u/Captain_Amazing)\ **Post date:** [August 24, 2013, 1:15am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/26 "2013-08-24T01:15:16Z")
> [@BrainGlutton](#): > > I don’t know about that, but Brazil is the only WTO member out of 156 that did not sign the Financial Services Agreement. But that’s not really what the Financial Services Agreement did. You can see it here: > **[WTO | legal texts - Marrakesh Agreement](https://www.wto.org/english/docs_e/legal_e/26-gats_01_e.htm)** > > Most of the WTOs agreements were the outcome of the 1986-94 Uruguay Round of trade negotiations. Some, including GATT 1994, were revisions of texts that previously existed under GATT as multilateral or plurilateral agreements. Some, such as GATS,... It pretty much says that countries can’t discriminate against signatories…that Australia can’t tax US services greater than their own services, or ban people from buying US investments if they’re otherwise identical to Australian investments or whatever. But it specifically says that can still regulate the industry to protect investors and assure the stability of their financial system. ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [August 24, 2013, 1:54am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/27 "2013-08-24T01:54:47Z")
So seriously, are you going to tell us what we should be so outraged about in that memo? ---
**Author:** ![kaylasdad99](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kaylasdad99/32/3398_2.png) [@kaylasdad99](https://boards.straightdope.com/u/kaylasdad99)\ **Post date:** [August 24, 2013, 2:45am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/28 "2013-08-24T02:45:51Z")
> [@brickbacon](#): > > Why is Jon Corzine’s name misspelled in the memo? Is that a typo? The image in the linked article doesn’t actually show enough of Corzine’s name to determine if it’s misspelled in the memo. The quotes in the _article_, OTOH, are likely to have been transcribed manually. And there you can see Corzine’s name spelled with an “h.” It’s my belief that the misspell was the responsibility of whoever typed the article. Unless you have a more complete image of the actual memo. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [August 24, 2013, 3:38am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/29 "2013-08-24T03:38:51Z")
> [@Simplicio](#): > > So seriously, are you going to tell us what we should be so outraged about in that memo? Policymakers of the United States government conspiring with bankers to make the world better for bankers and for nobody else. Is that not enough?! ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [August 24, 2013, 3:56am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/30 "2013-08-24T03:56:52Z")
> [@BrainGlutton](#): > > Policymakers of the United States government conspiring with bankers to make the world better for bankers and for nobody else. Is that not enough?! Again, there was no conspiracy. Summers and Geitner publicly advocated for the legislative changes. There’s no indication in the memo of anything being kept secret. And there’s no indication that the changes were meant to “make the world better for bankers and nobody else”. This is all stuff the blogger made up. Indeed, the end of the memo seems to indicate the bankers needed some convincing regarding the proposed changes. So what in the memo, specifically, do you think is outrageous? ---
**Author:** ![Try2B\_Comprehensive](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/try2b_comprehensive/32/65_2.png) [@Try2B\_Comprehensive](https://boards.straightdope.com/u/Try2B_Comprehensive)\ **Post date:** [August 24, 2013, 4:28am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/31 "2013-08-24T04:28:04Z")
> [@](#): > > The Memo confirmed every conspiracy freak’s fantasy \ So there is this cabal of big shots, and they pull off a global heist worthy of Lex Luthor, one which brings down whole nations, leaves others unscathed, yet all are within its grasp save Brazil, because they were all conned into a sort of legally-binding, limited one world government, an oligarchy in the big shots’ pockets. And it is kind of like Genesis, kind of like chess, and Obama is about to take a bite out of the wrong apple, which will generate either a dove or a hawk, over unemployment/inflation? ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [August 24, 2013, 5:29am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/32 "2013-08-24T05:29:53Z")
People outside of the financial industry and even most inside of it didn’t really understand what failing to regulate derivatives would mean. First there was the issue of leverage. In normal fractional reserve banking you need to have reserve ratios of at least 10% or so. IOW you keep 10% of the assets you claim as ready reserves and only loan out at most the other 90%. I don’t remember what if any restrictions were placed on the derivatives industry but I don’t think it was anywhere near that. That’s fine as long as the market for such things is expanding but when it contracts, deleveraging is more of a bitch than ever. When you’re leveraged at 100 to 1 instead of 10 to 1 say and the house of cards comes tumbling down, you are well and truly boned as we saw in 2008. The other issue is what I call a cascade effect that amplifies the leverage issue. For example, let’s say you sell a CDS on Portugal’s debt for a nominal value of $1M with annual premium payment of 5% or $50k. That $50k is now a payment stream which can be turned around and sold as another type of derivative such as TRS (total return swap) maybe - not sure about that one. The point is that these derivatives can ‘feed’ on themselves in a sense and amplify the leverage issue that was already bad to begin with. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [August 25, 2013, 3:23am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/33 "2013-08-25T03:23:23Z")
> [@BrainGlutton](#): > > I don’t know about that, but Brazil is the only WTO member out of 156 that did not sign the Financial Services Agreement. You don’t even know what the Financial Services amendments to GATT say. You’ve no idea what effect they have or don’t have or what their purpose is. You have no idea what they say on the subject of “derivatives” and investment banks. ---
**Author:** ![lurking\_guest](https://avatars.discourse-cdn.com/v4/letter/l/2acd7d/32.png) [@lurking\_guest](https://boards.straightdope.com/u/lurking_guest)\ **Post date:** [August 25, 2013, 4:58am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/34 "2013-08-25T04:58:50Z")
Really, Dopers? All of these beautifally ‘intelligent’ members and they keep debating…and debating…and debating…reality. From Der Tris (or whomever) to Polycarp. Ha! The Elites of the World care not about the Straight Dope Message Board. Nor the Governments of the World. Nor the conclusions of which they have arrived. So…does the whole dang Board boil down to ‘Recreational Outrage’? Just fun! Yes. Hang on boy and girls. To one another. Because beyond that there is nothing. Proof of your ‘Intellect’ mattering in this world? Changing anything? Let us know. Cuz if any one person or more than one person on this Message Board has EVER made a difference in the world, well…it would be good to know. The Conservatives **hate** \*\*\*\*the Liberals and vice versa. This Message Board gives them the chance to spout. ALL of them on _ **both sides** _ the opportunity to SPOUT. And having done that for 10,000 or 20,000 or 30,000 Posts…let’s have EVIDENCE of what that has EVER changed. Recreational Outrage in advance of one’s own agenda is simply, common. HELLO, ‘Conservatives’ and ‘Liberals’…you are each and severally responsible for the fractions in our Society. Hope your individual **AGENDAS** are **WORTH** the Wars this World has fought. No? Then, shame on you. ---
**Author:** ![tomndebb](https://avatars.discourse-cdn.com/v4/letter/t/b9e5f3/32.png) [@tomndebb](https://boards.straightdope.com/u/tomndebb)\ **Post date:** [August 25, 2013, 2:14pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/35 "2013-08-25T14:14:24Z")
**lurking guest** , you are free to open your own thread in The BBQ Pit to express your own recreational outrage; you are free to open a new thread in Great Debates to argue whether there is a point to the discussions you find here; you may open a thread in IMHO to ask how many share your opinions. What you may not do is wander into a thread and simply declare that the thread, itself is pointless and the participants are foolish to post to it. That is threadshitting and you will not do it again. [/Moderating] ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [September 9, 2013, 7:28pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/36 "2013-09-09T19:28:32Z")
Not sure it’s worth dredging this up after more than a week, but the NYT doesn’t seem to have a very high opinion of Summers. In a Sept 5th opinion piece it gives a partial catalog of his failings with comments like > [@](#): > > Mr. Summers’s reputation is replete with evidence of a temperament unsuited to lead the Fed. > [@](#): > > His record on financial regulation is abysmal, and he has not acknowledged the errors. > [@](#): > > Mr. Summers has also shown an indifference to the effects of economic decisions on ordinary people It concludes with > [@](#): > > Senators who have endorsed Ms. Yellen would do well to let Mr. Obama know, either publicly or through back channels, that their endorsement translates into a no vote for Mr. Summers. ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [September 9, 2013, 7:29pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/37 "2013-09-09T19:29:56Z")
Got a blank edit window - [here’s the cite](http://www.nytimes.com/2013/09/06/opinion/the-federal-reserve-nomination.html?_r=1&). ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [September 15, 2013, 8:15pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/38 "2013-09-15T20:15:30Z")
There’s been an astonishing amount of deliberately missing the point in this thread. Many USA voters were unaware of what was happening at the time, and too many voters now, this is unknown history. The overall point, that globalized finance did this damage, it didn’t have to happen, and Obama’s been advised by the same jackasses who set the world up to fall down hard, is very provocative. Bravo, OP. ---
**Author:** ![newcomer](https://avatars.discourse-cdn.com/v4/letter/n/e5b9ba/32.png) [@newcomer](https://boards.straightdope.com/u/newcomer)\ **Post date:** [September 15, 2013, 9:44pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/39 "2013-09-15T21:44:58Z")
Ha! > [@](#): > > Larry Summers on Sunday withdrew his name from consideration as chairman of the Federal Reserve, a defeat for President Barack Obama who could not convince members of his own party to shelve their opposition to his former top economic adviser. > > Read more: [http://www.politico.com/story/2013/09/larry-summers-withdraws-name-federal-reserve-chairman-96824.html#ixzz2f04pt0Wj](http://www.politico.com/story/2013/09/larry-summers-withdraws-name-federal-reserve-chairman-96824.html#ixzz2f04pt0Wj) [http://www.politico.com/story/2013/09/larry-summers-withdraws-name-federal-reserve-chairman-96824.html](http://www.politico.com/story/2013/09/larry-summers-withdraws-name-federal-reserve-chairman-96824.html) Good job, OP! ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [September 16, 2013, 10:20pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/40 "2013-09-16T22:20:05Z")
[_The Nation_ gloats!](http://www.thenation.com/blog/176175/populist-rebellion-tripped-larry-summers#axzz2f0XbRr6W) [Previous page](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917.md?page=1) [Next page](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917.md?page=3)