As Ben Bernanke’s term as chairman of the Federal Reserve Bank comes to an end, the Obama Administration favors the worst, most unqualified choice to lead the Central Bank, Larry Summers.
The choices for Bernanke’s replacement have been narrowed down to two candidates. Until recently, the odds on favorite to replace Bernanke as Chairman of the Central Bank had been Janet Yellen. Yellen, an imminently qualified individual who has been president and chief executive officer of the Twelfth District Federal Reserve Bank of San Francisco since 2004 has been endorsed by many of the most respected economists.
Dr Yellen has had a long, distinguished career and is highly respected having served in the 1990’s as a member of the Board of Governors of the Federal Reserve System, chair of the Council of Economic Advisers, and chair of the Economic Policy Committee of the Organization for Economic Cooperation and Development.
The Wall Street Banks and the Obama Administration have let it be known that their desired replacement for Chair of the Central Bank is none other than, Larry Summers. Summer’s has a disgraceful record and it’s easy to see why Wall Street and the Wall Street financed Obama Administration would want to have Summers in charge and would reject Yellen who is the polar opposite of Summers.
During the time Summers served in the Clinton Administration, he and Treasury Secretary Robert Rubin (Goldman Sachs) pushed the repeal of the Glass Steagall Act in 1999 and the deregulation of commodities and derivatives trading in 2000, which lead to the banking collapse of 2008.
The Glass Steagall Act was a Depression Era law designed to prevent bank defaults and restore confidence in the banking system. The U.S. government insured deposits of banking customers through the Federal Deposit Insurance Corporation (FDIC). The insurance industry was also heavily regulated by Glass Steagall.
Wall Street Investment Banks were required by law to post signs that they were not FDIC insured and any stocks, bonds, derivatives, etc. were at the investor’s own risk. The rating agencies were paid by the investor to rate the risk of the Wall Street created products, to gauge the financial risk to investors so the investor could make an informed decision with regard to their financial investments. Therefore the rating agencies had a fiduciary responsibility to the investors. That changed after repeal of Glass Steagall; Wall Street now paid the rating agencies to rate their products.
Summers has had a long, well documented problem with smart women. One case was his demeaning treatment of Brooksley Born. Brooksley Born was appointed as head of the CFTC (Commodities Futures Trading Commission) in 1998 when the Rubin/Summers/Geithner wrecking crew was in a deregulation frenzy. Born warned that unregulated derivatives trading, collateralized debt obligations and credit default swaps could pose grave risks to the economy. She pushed for the CFTC to be the regulator to oversee the $33 trillion market but was shot down by Rubin and then Fed chair Alan Greenspan who preferred the Central Bank oversee that market.
Three quarters of a billion dollars was funneled into the Barack Obama campaign by Wall Street banks and once Obama was elected president, Rubin’s deregulating cabal was resurrected with Summers serving on Obama’s Economic Advisers Team and Geithner as Treasury Secretary.
Since the banking collapse of 2008 and the bailout of the Wall Street banks, the losses to Main Street in the form of jobs, pensions, municipalities, real estate, etc. was largely ignored. Also on Obama’s Economic Advisers Team was Christina Roemer.
Roemer fought for a $1.8 trillion dollar stimulus package to revitalize the economy and create jobs, but she was shot down by Larry Summers, who favored a much smaller stimulus package and continued deregulation of banks. The economy has had the slowest recovery on record and unemployment is doggedly high today, with little sign of recovery in site. Roemer left the Obama Administration due in part to a hostile work environment for women.
As we see dual headlines of record profits on Wall Street and cities such as Detroit headed for bankruptcy indebted to Wall Street Banks and facing further cannibalization of pensions and public assets; the result of the Rubin/Summers/Geithner bank coddling is painfully evident.
Recently, the ex-head of the FDIC, Sheila Bair endorsed Janet Yellen for the head of the Central Bank. Ms. Bair also served in the Clinton Administration with Brooksley Born and under the Obama Administration when Summers overruled Christina Roemer’s stimulus package in favor of Wall Street banks. It was Bair who as head of the FDIC unwound the insolvent banks with as little pain as possible to Main Street .
Larry Summers is by far the worst, most unqualified choice to head the Central Bank and his nomination should be shunned by all.
by Patricia Baeten
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