Larry Summers Defends Record On Derivatives During Clinton Administration (VIDEO)

Last month, Bill Clinton told ABC News that his former Treasury Secretaries, Robert Rubin and Larry Summers, gave him wrong advice on derivatives, and that he was wrong to take it. Though Clinton quickly walked back the remark, it continues to reverberate around Washington. Today, on CNN, Fareed Zakaria asked Summers about Clinton's comment and whether he'd changed his mind about derivatives.

Summers responded by saying that, like Keynes, "when conditions change, I change my views," and he defended his record during the Clinton administration:

Credit default swaps were in their infancy in the 1990s. There was no large market in them, and yet we see how much damage they did. It's a very different kind of need that's been pointed out and why we've worked so hard to strengthen derivatives regulation.

To take just one example, we've seen what damage can be done by leveraging. In the 90s, as secretary of the Treasury, I warned about the dangers of the leverage associated with Fannie Mae and Freddie Mac. Those dangers have become more pervasive over the last 10 years. So I think there has always been a case, and one I have always tried to make, for regulation, but that case has certainly gotten stronger, given what has happened.

WATCH:

Comments

[EdCorner]

04:06 PM on 06/06/2010

Summers is the most out of touch of all of them - Turbo Tax Geithner and .Bubble Ben - all criminals imho

[chillwind]

03:25 AM on 05/19/2010

We saw the damage that could be done by leveraging in the 1920's, Professor. The National Academy of Sciences should revoke your election. Maybe Elizabeth Warren can school you on the "high end" of things.

[jagrmeister721]

10:05 PM on 05/17/2010

Apparently Larry Summer's strategy, when it's pointed out that his bad advice was partly responsible for lax derivatives regulation, is to bore the questioner and audience to tears by speaking one word per minute.

[confusedposter]

09:47 PM on 05/17/2010

Larry Summers likes Mint Chocolate Chip ice cream. I just think that is weird. Mint? Chocolate? and Chips in your ice cream?
One time I saw a spider on my shoe, but I looked away. When I looked back, it was gone. I wonder if it is inside me now?

[zakon]

09:30 PM on 05/17/2010

Just another Pig_of_the_Empire

Be a rebel, not a subject

[wallyman]

08:54 PM on 05/17/2010

Clinton and Obama both hold this Summers in high regard. Just because the investment and morgage market went bust is no reflection on these guys.

[peaceandfreedom]

12:12 AM on 05/18/2010

Sure it is.

[taxpaying]

12:35 PM on 06/24/2010

Ask Brooksley Born if she agrees with you...

[confusedposter]

07:21 PM on 05/17/2010

Larry Summers is a human being. He breathes air. He eats food and drinks water.
Hi, how are you?

[LeeCalif]

06:23 PM on 05/17/2010

Larry Summers is a danger to our country.

[rawresolve]

05:55 PM on 05/17/2010

If President Obama is trying to inspire confidence that the casino called Wall Street is going to be reigned in and re-regulated, Larry could not be a worse spokesman.

[ms winkle]

04:54 PM on 05/17/2010

If you read the 13 bankers it seems some people at the time did know that deregulation was a big mistake. Summers and co squashed them. Guess what Summers still has power and a voice. The people who saw it coming...reduced to the sidelines.

WE will not see real CHANGE until we have a true democratic system. How many more repub, dems in power cycles do we need to witness until we wake up to the fact they are not working for the PEOPLE?

WE are not the first generation to be angry about what is going on. YET NOTHING CHANGES

[peaceandfreedom]

12:13 AM on 05/18/2010

Yep. One word about who saw it coming--

Brooksely Born!

[Avanti2]

03:50 PM on 05/17/2010

Don't think Obama and Summers have put us on the path towards a Major Financial Debacle similar to what the EU is currently going through?

Take a look at this analysis and set of facts and then make your own judgements:

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=532490

[DiogenesOfAlaska]

03:46 PM on 05/17/2010

It seems many commenters read only the headline but didn't listen to the video.

The emphasis is not on defending what he did during the Clinton years - when derivative markets were indeed much much smaller - but on stating with perfect clarity that the situation is different now.

Even the fact that he doesn't polish his smile doesn't work against him. I certainly prefer a guy who learns and re-evaluates to one who cares about his appearances.

:-]

(this is short for an unpolished smile).

[guveqzero]

02:10 PM on 05/17/2010

When someone's life's work is deemed a flaw, how do you expect them to react? They will try until the very end, like Ahab, and begin a search. And when failure is most evident, they will take everyone else that follows them down into the abyss.

[HatingTheGame]

01:11 PM on 05/17/2010

Wow, Summers and Kagan - separated at birth? Do all Harvard people look like this?

Eriee!

[nana-anne]

01:01 PM on 05/17/2010

Poor Larry no matter how broadly he smiles he just can't help but look menacing. Regardless how brilliant he may be in finance the Administration would do well to keep him out of the public eye. Find that secret dungeon Cheney operated out of during his tenure as co-prez.