# 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:** 3
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [September 16, 2013, 10:47pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/41 "2013-09-16T22:47:55Z")
I doubt this was voluntary and as I skimmed the article, I got the impression that’s what they were hinting at but maybe not. Summers is enough of an egotistical douche that he would have had a permanent erection at the idea of being fed chair. There’s no way he walked away from this willingly. I’m just worried about what they had to offer him to get his cooperation. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [September 17, 2013, 12:39am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/42 "2013-09-17T00:39:04Z")
> [@deltasigma](#): > > I doubt this was voluntary and as I skimmed the article, I got the impression that’s what they were hinting at but maybe not. > > Summers is enough of an egotistical douche that he would have had a permanent erection at the idea of being fed chair. There’s no way he walked away from this willingly. I’m just worried about what they had to offer him to get his cooperation. Why would they need his cooperation? ---
**Author:** ![newcomer](https://avatars.discourse-cdn.com/v4/letter/n/e5b9ba/32.png) [@newcomer](https://boards.straightdope.com/u/newcomer)\ **Post date:** [September 17, 2013, 1:03am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/43 "2013-09-17T01:03:17Z")
> [@deltasigma](#): > > I doubt this was voluntary and as I skimmed the article, I got the impression that’s what they were hinting at but maybe not. > > Summers is enough of an egotistical douche that he would have had a permanent erection at the idea of being fed chair. There’s no way he walked away from this willingly. I’m just worried about what they had to offer him to get his cooperation. The point is, I think, that he had to withdraw involuntary. Otherwise, there’s no basis for gloating. ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [September 17, 2013, 1:12am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/44 "2013-09-17T01:12:00Z")
> [@BrainGlutton](#): > > Why would they need his cooperation? Because he still has powerful supporters who don’t especially like Yellen. Yellen is fairly dovish on monetary policy and Summers is seen as being more hawkish. A lot of people think the fed needs to start the taper of bond buying sooner rather than later and have been uncomfortable with the QE strategy for a very long time. They still probably won’t support Yellen, but having Summers w/drawn of his own accord eliminates the leading opposition that favors more restrictive policies. So if there is no viable candidate to support in opposition, there won’t be any dissension. > [@newcomer](#): > > The point is, I think, that he had to withdraw involuntary. Otherwise, there’s no basis for gloating. I didn’t get a gloating vibe, but like I said, I just skimmed the article for information not tone. But even if you’re right about the intent, I think you can certainly gloat over someone being forced to do something that is anathema to their interests and desires. In fact, that’s probably the ultimate thing to gloat over. ---
**Author:** ![newcomer](https://avatars.discourse-cdn.com/v4/letter/n/e5b9ba/32.png) [@newcomer](https://boards.straightdope.com/u/newcomer)\ **Post date:** [September 17, 2013, 1:21am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/45 "2013-09-17T01:21:41Z")
> [@deltasigma](#): > > But even if you’re right about the intent, I think you can certainly gloat over someone being forced to do something that is anathema to their interests and desires. In fact, that’s probably the ultimate thing to gloat over. I think gloating comes from the fact that he finally stumbled over his own inflated ego. Which is ironic considering that Fed Chair job is to control inflation. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [September 17, 2013, 1:46am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/46 "2013-09-17T01:46:22Z")
> [@newcomer](#): > > Which is ironic considering that Fed Chair job is to control inflation. No, it is to control the money supply – whether in an inflationary or deflationary way depends on circumstances. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [September 17, 2013, 2:53am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/47 "2013-09-17T02:53:59Z")
[Greg Palast also gloats, kindasorta, but also warns.](http://us4.campaign-archive2.com/?u=33e4ec877eed6a43863a4a92e&id=60e22b06aa&e=b784a2d50d) > [@](#): > > Joseph Stiglitz couldn’t believe his ears. Here they were in the White House, with President Bill Clinton asking the chiefs of the US Treasury for guidance on the life and death of America’s economy, when the Deputy Secretary of the Treasury Larry Summers turns to his boss, Secretary Robert Rubin, and says, “What would Goldman think of that?” > > Huh? > > Then, at another meeting, Summers said it again: _What would Goldman think?_ > > A shocked Stiglitz, then Chairman of the President’s Council of Economic Advisors, told me he’d turned to Summers, and asked if Summers thought it appropriate to decide US economic policy based on “what Goldman thought.” As opposed to say, the facts, or say, the needs of the American public, you know, all that stuff that we heard in Cabinet meetings on _The West Wing._ > > Summers looked at Stiglitz like Stiglitz was some kind of naive fool who’d read too many civics books. > > \ > If you want to know why Obama would choose such a grifter and gamer to head the Fed, you have to ask, _Who picked Obama?_ Ten years ago, Barry Obama was a nothing, a State Senator from the South Side of Chicago. > > But then, he got lucky. A local bank, Superior, was shut down by regulators for mortgage shenanigans ripping off Black folk. The bank’s Chairwoman, Penny Pritzker was so angry at regulators, she decided to eliminate them: and that required a new President. > > The billionaires connected Obama to Jamie Dimon of J.P. Morgan, but most importantly to Robert Rubin, former Treasury Secretary, but most important, former CEO of Goldman Sachs and mentor of Larry Summers. Without Rubin’s blessing and overwhelming fundraising power, Obama would still be arguing over zoning on Halsted Street. > > Rubin picked Obama and Obama picks whom Rubin picks for him. > > Because, in the end, Obama knows he must choose a Fed chief based on the answer to one question: What would Goldman think? ---
**Author:** ![Werekoala](https://avatars.discourse-cdn.com/v4/letter/w/7993a0/32.png) [@Werekoala](https://boards.straightdope.com/u/Werekoala)\ **Post date:** [September 17, 2013, 3:29am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/48 "2013-09-17T03:29:03Z")
So the floodgates will remain open - that’ll fix everything. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [September 17, 2013, 3:32am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/49 "2013-09-17T03:32:00Z")
> [@Werekoala](#): > > So the floodgates will remain open - that’ll fix everything. Which particular floodgates? Are we about to abolish all import restrictions and tariffs? That’s my understanding of “floodgates” in an economic context. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [September 17, 2013, 3:32am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/50 "2013-09-17T03:32:34Z")
Does Greg Palast have any evidence to support these remarkable claims? ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [September 17, 2013, 10:16am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/51 "2013-09-17T10:16:27Z")
> [@Werekoala](#): > > So the floodgates will remain open - that’ll fix everything. No. Why do you think the 10 year yield is up [more than one full percentage point](http://finance.yahoo.com/echarts?s=%5ETNX+Interactive#symbol=%5Etnx;range=6m;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;)since May? That’s happened because everyone knows that the fed will be cutting back on it’s bond purchase program and will eventually start to drain liquidity. Right now, the speculation is that the fed will cut it’s bond purchases from $85B per month to $70-75B. We might find that out this week. The point is that compared to the more than $2000B of excess liquidity already in the system, it’s a little comical to be calling that much in purchases a “flood.” Beyond that, none of that money is being “printed.” The fed owns a huge number of MBSs and gets paid interest on those. It uses that money to buy the securities it currently does as part of its bond purchase program and the rest goes to the Treasury. All that will happen is that it will buy less and more will go to the Treasury. Eventually, those MBSs will be sold back into the market to drain liquidity or they will simply mature and be retired. The average mortgage has a life of 7 years before the house it’s financing is sold or refinanced. Refinancings are on the decline with the rise in interest rates, but people still sell their homes and move, so even with 30 year mortgages, you seldom have ones that run to maturity. ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [September 17, 2013, 10:35am UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/52 "2013-09-17T10:35:29Z")
> [@BrainGlutton](#): > > [Greg Palast also gloats, kindasorta, but also warns.](http://us4.campaign-archive2.com/?u=33e4ec877eed6a43863a4a92e&id=60e22b06aa&e=b784a2d50d) “The bank’s Chairwoman, Penny Pritzker was so angry at regulators, she decided to eliminate them: and that required a new President.” LOL. I see that’s working out well for them. Jamie Dimon been getting his ass reamed lately by regulators. I will admit though that the delay in implementing regulations on proprietary trading has worked out well for the banks, and over all, they’re still too big too fail. Plus you had that HSBC fiasco where they were too big to jail. So maybe there really is something to it. I don’t generally care much about the politics. But just step back for a moment and think about it. As a bank, would you rather have a monetary hawk or dove as fed chair? I think you have to go with dove, clearly. That’s Yellen. So while Summers may be Goldman’s pick, does he really serve their interests? I don’t see it. ---
**Author:** ![newcomer](https://avatars.discourse-cdn.com/v4/letter/n/e5b9ba/32.png) [@newcomer](https://boards.straightdope.com/u/newcomer)\ **Post date:** [September 17, 2013, 6:18pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/53 "2013-09-17T18:18:34Z")
> [@deltasigma](#): > > But just step back for a moment and think about it. As a bank, would you rather have a monetary hawk or dove as fed chair? I think you have to go with dove, clearly. That’s Yellen. So while Summers may be Goldman’s pick, does he really serve their interests? I don’t see it. But the issue is not “dove” vs. “hawk” – the issue is what are your priorities as Fed Chair and do those who you should oversee get to tell you how to go about regulating them. Larry is widely seen as a member of a certain fraction that aligns itself with big banks and anyone who would at least be impartial (i.e. do the job as mandated) is much better, even if the person may not be the top dog. The intent is what distinguishes these two, not the style. ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [September 17, 2013, 6:29pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/54 "2013-09-17T18:29:21Z")
That’s true enough. Summers would definitely take a more laissez faire approach to regulation than Yellen. But then even Bernanke let that [whole shell game with the aluminum warehousing](http://boards.straightdope.com/sdmb/www.cnbc.com/id/100900759)go on until it was front page news, so you have to wonder if it really matters who’s running the show once you get away from monetary policy. The thing about Bernanke is that he is a consensus builder. He’s not an autocrat like Greenspan was. He looks to the other governors and board members for input and tries to get the best information available from all sources and use it. And that has worked well. We want that pattern of management to become institutionalized at the fed and Yellen is someone who can help do that. Summers would be a return to the bad old days. He alienates everyone and would only listen to his inner circle of cliquish yes men. But still, you’re right that there are probably a host of considerations besides monetary policy with regulation being a big one. I hope the future of fed mgmt is also one but I’m probably being overly optimistic. ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [September 17, 2013, 7:53pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/55 "2013-09-17T19:53:12Z")
I do have to give Larry points simply for [style](http://www.businessinsider.com/larry-summers-the-winklevoss-harvard-2013-9) though. > [@](#): > > Summers was asked to address his interactions with the Winklevoss twins during [Fortune’s 2011 Brainstorm Tech conference](http://tech.fortune.cnn.com/2011/07/19/brainstorm-tech-video-larry-summers-transcript/). Here’s an excerpt from the transcript: > MR. ISAACSON: So was that scene in The Social Network true? > DR. SUMMERS: I’ve heard it said that I can be arrogant. > DR. SUMMERS: If that’s true, I surely was on that occasion. One of the things you learn as a college president is that if an undergraduate is wearing a tie and jacket on Thursday afternoon at three o’clock, there are two possibilities. One is that they’re looking for a job and have an interview; the other is that they are an asshole. > DR. SUMMERS: This was the latter case. Rarely, have I encountered such swagger, and I tried to respond in kind. ---
**Author:** ![newcomer](https://avatars.discourse-cdn.com/v4/letter/n/e5b9ba/32.png) [@newcomer](https://boards.straightdope.com/u/newcomer)\ **Post date:** [September 22, 2013, 1:22pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/56 "2013-09-22T13:22:28Z")
> [@BrainGlutton](#): > > No, it is to control the money supply – whether in an inflationary or deflationary way depends on circumstances. Considering this last “Head Fake” move by Bernanke I’d swear Fed Chair primary goal is\*\* “redistribution of wealth from the middle class and the poor to the rich”\*\*. /\* bold part as per Duquesne Capital’s Stanley Druckenmiller [Surprise Move by Fed](http://www.nytimes.com/2013/09/19/business/economy/fed-in-surprise-move-postpones-retreat-from-stimulus-campaign.html?pagewanted=all&_r=0) /\* You got to love NYT’s modifier “surprise” As a side note, I think I can totally see how [did Italian comics writers come up with a super-villian who steals from poor and gives to the rich](http://boards.straightdope.com/sdmb/showpost.php?p=16174032&postcount=18) (sort of reverse Robin Hood). Plus, BrainGlutton… [you were in that thread](http://boards.straightdope.com/sdmb/showthread.php?t=687559) too 🙂 This all makes too much sense … ---
**Author:** ![newcomer](https://avatars.discourse-cdn.com/v4/letter/n/e5b9ba/32.png) [@newcomer](https://boards.straightdope.com/u/newcomer)\ **Post date:** [September 22, 2013, 1:24pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/57 "2013-09-22T13:24:43Z")
> [@RickJay](#): > > Does Greg Palast have any evidence to support these remarkable claims? I suppose, those “hurt” by his allegations can always file a suit. I’ll hold my breath though … ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [September 22, 2013, 7:40pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/58 "2013-09-22T19:40:27Z")
You do realize that had they tapered, they were only going to cut bond purchases by at most $15B or 18% from the current $85B - right? The NYT article is unduly hyperbolic. ---
**Author:** ![newcomer](https://avatars.discourse-cdn.com/v4/letter/n/e5b9ba/32.png) [@newcomer](https://boards.straightdope.com/u/newcomer)\ **Post date:** [September 22, 2013, 8:06pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/59 "2013-09-22T20:06:19Z")
> [@deltasigma](#): > > You do realize that had they tapered, they were only going to cut bond purchases by at most $15B or 18% from the current $85B - right? The NYT article is unduly hyperbolic. Are you suggesting the difference does not make any difference - quantitatively or symbolically? ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [September 22, 2013, 8:12pm UTC](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917/60 "2013-09-22T20:12:55Z")
> [@newcomer](#): > > Are you suggesting the difference does not make any difference - quantitatively or symbolically? I’m suggesting that the NYT is amping up the story to generate clicks. Everyone thought it was likely the fed would start to taper soon and the consensus was that would be at the Sept meeting but no one thought it was a done deal. Yes, the market had start anticipating this move back in May but that wasn’t based on a Sept deadline. Plus the fed has always been very clear in its forward guidance and said that it remains flexible and will change course as circumstances dictate - which is precisely what it did. If people don’t take them at their word, too fucking bad. [Previous page](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917.md?page=2) [Next page](https://boards.straightdope.com/t/larry-summers-smoking-gun-how-he-rubin-geithner-deregulated-banks-globally/666917.md?page=4)