Harvard's Toxic Swaps, Most Approved By Lawrence Summers, Cost The University Almost $1B

03/18/2010 05:12 am ET | Updated May 25, 2011
  • Michael McDonald, John Lauerman, and Gillian Wee bloomberg.com

Harvard's swaps, which assumed that interest rates would rise, proved so toxic that the 373-year-old institution agreed to pay banks a total of almost $1 billion to terminate them. Most of the wrong-way bets were made in 2004, when Lawrence Summers, now President Barack Obama's economic adviser, led the university. Cranes were recently removed from the construction site of a $1 billion science center that was to be the expansion's centerpiece, a reminder of Summers's ambition. The school suspended work on the building last week.

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