Wow. Our experiment is off to a great start—let's see if we can finish it off sooner than expected.
Larry Summers, the top economic aide and somewhat mercurial adviser to President Obama, told leading US business leaders in a speech in New York yesterday to accept the bitter pill of financial reform. "A strong government (that) responds to market failures, provides social protection regulates potential abuses and supports economic conditions is undeniably in the long-run interest of business, he told audience members.
Summers' speech comes as the Senate banking committee, led by Sen. Chris Dodd (D-Conn.), is trying to reach an agreement on a bipartisan financial-reform bill. The Obama administration has of late deployed some of its top financial officials—Treasury Assistant Secretary Michael Barr, even President Obama himself—to drum up support in the financial-services community for Congress' proposed crackdown on financial products, the housing markets, and mortgage lenders, while also bolstering consumer protections—a major sticking point for lawmakers in Washington.
Here's a few other highlights from Reuters' report on Summers' stump speech yesterday:
While Summers said he understood business antipathy, "history teaches us that active government is a necessary force," he added.
To make his point, Summers suggested that few, if any, major financial institutions would have survived without the emergency liquidity offered by the government.
It was just 18 months ago that leading companies were reduced to borrowing money overnight because they were unable to borrow for a week, he said. The nine financial institutions benefited by the U.S. bailout fund today have a combined market value approaching $1 trillion, he said.
On comprehensive financial reform, he said "On one level, it's mind numbingly complex. On another, it's not that hard."