Summers Defends Record, Warns Of Seeing "False Dawns" In Economic Crisis

WASHINGTON — President Barack Obama's economic adviser on Friday defended the administration's efforts to rescue banks, insurance companies and car makers, saying the actions were taken out of "necessity, not choice."

Lawrence Summers' remarks come after government bailouts of insurance giant American International Group Inc., Citigroup Inc. and other banks, General Motors Corp. and Chrysler LLC have put billions of taxpayer dollars at risk, and in some cases provoked public outrage.

In a speech to the Council on Foreign Relations in New York, Summers said the government has intervened to avoid further damage to the economy and financial markets.

"We act only when necessary to avert unacceptable _ and in some cases dire _ outcomes," the director of the White House National Economic Council said. The president "did not run ... to manage banks, insurance companies or car manufacturers. The actions we take are those of necessity, not choice."

The focus is to ensure that such intervention is temporary, based on market principles and "minimally intrusive," Summers said.

On the economy, Summers used slowing job losses and rising consumer and business sentiment to suggest that the worst of the recession has passed.

"While we still have a long way to go, the sense of free-fall that surrounded any reading of economic statistics a few months ago is no longer present," he said.

While crediting the president's stimulus package of increased government spending and tax cuts for contributing to the economic improvements, Summers warned that policymakers can't be complacent.

"There have already been several false dawns during this crisis," he said.

Summers made a pitch for revamping the nation's regulatory structure to better guard against future financial crises. Reiterating the administration's stated plan, he called for a regulator to police big, globally interconnected financial companies whose failure would endanger the economy and a system to safely wind down such firms on the verge of collapse.

Comments

[roger54]

Take back the trillions of $$$ given to the banks, who just sit on it and make it totally ineffective then start government incentive to create realistic industries that give employment and generate real productive income, some of which would hopefully be from exports.

Every other country, especially China and most of Europe have goverment incentives to protect it's industries. No matter what you call it it's a form of protectionism and its inevitable. We should stop being naive and take care of our own house. The only ones who win if we don't are the multinational corporations who don't care where they get their hand out.

good articles for a slow news day: http://www.bit.ly/12NCJR/12NCJR>Econ & Finance Articles Updated Daily

[themodernleader]

Our government is flat-out busted. Our fraudulent banks have been bailed out such that the same swindlers have been made whole with money we don't have and promises (obligations) we can't keep. Our people are near bankruptcy or in bankruptcy while losing highly skilled jobs in the millions. Our State and local governments are beginning to cut personnel en masse as tax revenues begin to dry up. The small business owner is a virtually disappearing entity. Debt is all consuming everywhere one looks. Inflation's poisonous vines are climbing as reckless finance invites auction prices for the rest of our manufacturing and technology that we haven't outsourced. All the while the planted agents of corrupt wealth whisper sweet, comforting phrases in the ears of a gullible, transfixed President, as the Nation crumbles and fails.

[davidwayneosedach]

Of course Summers is out there blowing his own horn. His statements are meaningless.

[5hy56]

Take back the trillions of $$$ given to the banks, who just sit on it and make it totally ineffective then start government incentive to create realistic industries that give employment and generate real productive income, some of which would hopefully be from exports.

Every other country, especially China and most of Europe have goverment incentives to protect it's industries. No matter what you call it it's a form of protectionism and its inevitable. We should stop being naive and take care of our own house. The only ones who win if we don't are the multinational corporations who don't care where they get their hand out.

good articles for a slow news day: http://www.bit.ly/12NCJR/12NCJR>Econ & Finance Articles Updated Daily

[mitsie]

Of course Summers is going to back the plan what a ridiculous statement. Do you think he would speak out against it? There are just too many reporters stirring the post these days, unable to see much good in what's going on.

[3rdparty]

The cancer of the economic system are the toxic derivatives. The acronym TARP means Toxic Asset Relief Program. Treasury secretary Paulson chose not to remove the toxic assets from the infected institutions but to leave them there and give the money to his friends instead. Treasury secretary Geithner , The wall street club’s favorite member, just did what he was supposed to do as a loyal member of the club that totaled the American economy again not removing the toxic assets from the infected institutions (because it would expose that some of his buddies’ institutions are terminal) but leaving them there. I am often criticized for being blunt, but freedom of the press has no meaning unless it respects and enables the constitutional right of American citizens to expose the truth even if in order to effectively do so it paints pampered and protected members of the establishment in an unflattering light. The truth should not be suppressed to protect those who are placing the economic health of American citizens at extraordinary risk. So amazingly over half year after the economy suffered a major meltdown, no one has treated the cancer. What do you think is going to happen if the cancer goes untreated? What do you use a tarp for? Isn’t it used to cover something up? Larry summers, has just let a shaft of light come out from under the TARP to let us know that the patient is still sick and dying.

[tippydog11]

Thank Bush for it...the ripple effect takes time to come full bloom and it has been building for the last 8 years...Pres Obama said and this should be common sense to all...... the first thing to go is jobs (China) (Banks all over the world has been effective that is how bad things are because of deceiving bank games) and the last positive thing to come back .....this is a grave mess Pres Obama has been handed and with no money to restart back up...banks are quilty for this..and ran out of money why? Our money?

[Carolab]

Summers reminds me of something from Alice in Wonderland:

You!' said the Caterpillar contemptuously.

`Who are YOU?'

Alice felt a little irritated at the Caterpillar's making such VERY short remarks, and she drew herself up and said, very gravely, `I think, you out to tell me who YOU are, first.'

`Why?' said the Caterpillar.

Perhaps Geithner is the Mad Hatter.

[PhilipTaylor]

More like a big old Night Crawler!

[leevntheus]

The stock market continues to rise and gas prices continue to shoot up as MIDDLE AMERICA continues to sink in this quagmire. Ladies and gentlemen, the drawbridge has been raised. We are outside the castle and Obama is in it. The bankers are in it. Telecom, Big Pharma, Big Oil, Health Insurance....they're all safely in the castle and OBAMA SPEAKS FOR THEM while we suffer on this side of the moat.

It's time to go get our pitchforks.

[wwwyourcampdaddycom]

yeah, I kind of feel the same way, but I don't feel like fighting. I can be homeless without any belongings. If people keep reacting then political parties get stronger. But everyone is for a strong federal centralized government. Every since roosevelt, people believe it is the governments job to provide security for individuals. Government's job is to clear space to allow an individual to grow, not tel people what doctor they can see, what car they must buy and so one. But Plato did say a democracy was only one step above tryanny. A dictator does not have to be an individual, it can be a government on whole.

[StephenJK]

Government can't do anything for our security when the laws of the cosmos dictate our security or lack thereof. Believe me, NO ONE has ANY control in the next few years.

[mitsie]

Oh for God sakes grow up.

[mattyd123]

Insightful and deep!

[MacQ]

We would be much better off if nothing had been done.
Mr. Obama has wrecked investor confidence by using the "economy" to threaten political opponents, to provide cover for spending sprees, to nullify legal contracts, and to take over businesses unconstitutionally.


Then he stands there and says he's save 150,000 jobs.
Reminds me of a guy who says he won 100 bucks on the slots, but neglects to mention that he lost 10 grand overall at the casino.

The rising Unemployment associated with this recession can be laid directly at Mr. Obama's feet. It was HE who spearheaded policies and made statements that signalled to business that they are in for a skrooing.

[jane gutowski]

Youre right! When will everybody wake up and see this?

[mitsie]

You are probably going to say next to lower the taxes. You all are a bunch of babies crying because you aren't getting what you want. Apparently you haven't been listening, that it could take up to four years for things to get better and that unemployment is the last thing to improve. Of course you probably don't want to hear anying good if your a Republican.

[5hy56]

The recovery is a forest. People have let their credit cards go, and don"t have mortgage payments it looks as if we are spending more and people have disposable incomes again. Actually, savings are getting drained and there are no new jobs. We are in the calm before the storm. People are spending what every little cash they have left on eating out and shopping for smaller ticket items. This will come to an end in 6 months. There are no new jobs. Can you hear the quiet in America?

thanks for contributing.

hat tip to http://short.ie/g264dk/g264dk">E for providing good finance and economics articles

[wwwyourcampdaddycom]

yeah, you need to talk to the majority of Americans. You will see. The top will always be doing better than the bottom 90 percent of Americans

[5hy56]

but annoyingly theStock market keeps going up

I guess there's no more crisis anymore, huh? no more recession? all
done. Problem fixed by minting a trillion dollars out of thin air. Happy days are here again.yay i love jobless recoveries. I love outsourcing. i love hyperinflation. I love huge
deficits. I love fear mongering pandering politicians, I love $4 gas and 140 oil. I love
making petro d1ctators rich
;
thanks for contributing.

hat tip to http://short.ie/g264dk/g264dk">E for providing good finance and economics articles .

[wwwyourcampdaddycom]

The recovery is a forest. People have let their credit cards go, and don’t have mortgage payments it looks as if we are spending more and people have disposable incomes again. Actually, savings are getting drained and there are no new jobs. We are in the calm before the storm. People are spending what every little cash they have left on eating out and shopping for smaller ticket items. This will come to an end in 6 months. There are no new jobs. Can you hear the quiet in America?

[getsmart85]

Summers was instrumental in creating this disaster. It's unfortunate that Obama is ga ga over his academic, double talking economic bs and has convinced the president that ivy league grads can make 2+2=5. Summers' gods are Wall Street executives and money exchangers are the heart of the economy.

[rock42]

Summers was instrumental getting repeal of the Glass Stegall act which allowed the banks to get in the CDO's etc which was just another form of the options game that in part helped cause the Great Depression. If you take a closer look it is the same institutions now as then. The only thing that has really saved a lot of bacon are the reforms that still exist from President Roosevelt's policies from that time - namely the FDIC insurance, unemployment insurance and social security. If these were not in place we would really be in much worse shape in this current depression.

[LeeCalif]

And the administration is helping create some of these false dawns by not closing any banks last nite (Fri.) and only closing one bank the Fri before and only three, the Friday before that.

Go to fdic.gov