Clinton: Rubin and Summers Gave Me Wrong Advice on Derivatives, and I Was Wrong To Take It

[RamboLiberal]

Source: ABC News

In my EXCLUSIVE “This Week” interview, I asked former President Bill Clinton if he thought he got bad advice on regulating complex financial instruments known as derivatives from his former Treasury Secretaries, Robert Rubin and Larry Summers. He acknowledged that all three of them were wrong about derivatives.

“On derivatives, yeah I think they were wrong and I think I was wrong to take because the argument on derivatives was that these things are expensive and sophisticated and only a handful of investors will buy them and they don’t need any extra protection, and any extra transparency. The money they’re putting up guarantees them transparency,” Clinton told me.

“And the flaw in that argument,” Clinton added, “was that first of all sometimes people with a lot of money make stupid decisions and make it without transparency.”

The former President also said he was also wrong about understanding the consequences if the derivatives market tanked. “The most important flaw was even if less than 1 percent of the total investment community is involved in derivative exchanges, so much money was involved that if they went bad, they could affect a 100 percent of the investments, and indeed a 100 percent of the citizens in countries, not investors, and I was wrong about that.”



Read more: http://blogs.abcnews.com/politicalpunch/2010/04/clinton-rubin-and-summers-gave-me-wrong-advice-on-derivatives-and-i-was-wrong-to-take-it.html

[Vincardog]

1. A day late?

[izquierdista]

2. Multiply

A decade late and BILLIONS of dollars short.

[Vincardog]

5. EggZZZZactly . Where are you on NAFTA now slick?

[aquart]

9. Yes. Manning up and admitting he was wrong.

Hard to do that before you make the mistake.

[No Elephants]

17. Meh. He was on The View after the 9/08 collapse and was still defending his desire for repeal of GS.

I think he was hoping it would blow over. And now he's blaming it on Summers and Rubin. How is that "manning" up again?

[ashling]

3. I can still here all of them and Phil Gramm

selling the line that this is not 1933 anymore and that today's banks and wall street have to be able to create new instruments for the complex financial markets to be competetive globally, yada, yada, yada

:puke:

[Psephos]

13. In Vegas, at least you get free booze while you gamble your fortune away. n/t

[No Elephants]

18. In Vegas, you need the booze bc you're dealing in your own money. And, even in Vegas, a gambler has

SOME chance of winning.

On the other hand, Bubba gambled away OUR money with no chance of beating the house. Where I come from, that ain't even considered a "gamble."

[BeyondGeography]

4. We know, Bill

[xchrom]

6. Recommend

[boppers]

7. The people with a lot of money weren't at risk.

That's why they make stupid decisions.

[truedelphi]

8. Awhile ago, Bill was being interviewed by a young California reporter,

And he came out with this "It is a shame no one in Washington will take on the issue of legalizing marijuana."

And of course the young journalist had the cajones to add at the bottom of her article, "But who happened to be the president of our nation for eight years?"

Granted it broke one of the primary rules of journalism, but I totally enjoyed her remark.

[No Elephants]

20. Which primary rule of journalism did her question break? Is it

unethical in journalism to point out the flaw in your interviewee's statement?

PS. The reporter was female. She did not have balls.

[BreweryYardRat]

33. You've seriously never heard that figure of speech before?

She acquired a set of figurative balls for that remark.

[provis99]

10. so I knew better than Clinton, Rubin, and Summers.

Because I (along with thousands of others) exactly predicted what the derivatives market would do, and why they were toxic. Little ole me. Either I should run the Treasury Dept, or Clinton and his buddies were massively incompetent on an epic level, or Clinton is lying; those are your only three choices.

[Chicago dyke]

19. you should run the treasury

i'm 100% serious. it's time that all the "serious" people running the economy were booted. they won't be, not anytime soon, but when the boot finally comes, it's going to be ugly. because not only should people like you be running the treasury, but your other option is also true. they were lying.

[No Elephants]

21. No, you did not know better than they did. You just did not care about campaign contributions.

[corpseratemedia]

29. that's why I don't believe him

[ProudDad]

11. So why is Summers in the Obama Admin, hmm???

Same old shit, different day...

[tblue37]

12. Why does Obama go to the same pool of frauds to select his financial advisors? nt

[lark]

34. Because they represent the same folks Obama does

Wall St. and the rich. Obama got huge campaign contributions from Wall St. and he puts their guys in. Don't think that happened by accident.

[Hekate]

14. So the Big Dog can admit his error and take the hits for it, but do you think any Bush ever will?

ANY Bush? Two of them have been President -- so far -- and they made plenty of mistakes that I doubt were honest errors. But I think it will be a cold day in Hell before any of them admits more than "Mistakes were made, I guess" which is passive voice for "They just happened, no one is responsible, least of all me."

Hekate

[No Elephants]

23. What admission? What hits? Please see Replies 17, 18, 21 and 22.

Bill has over $100 million dollars, and many many federal benefits, including a nice pension and office rent, that will continue for the rest of his life. Ask people who have been unemployed for two or more years who took the hits for Bill's alleged mistake.

[Lost4words]

24. Bill was no friend of the working class, he was at first, my Obama, hope!

what a wild disappointment he was to me.

So far Obama is running the same course.

[No Elephants]

30. Bill was a friend of his own election and re-election. To that end, he was a co-founder

of the DLC, which is akin to Third Way and New Democrat and which joined right wing nuts in subscribing to the PNAC memo.

Obama, who has described himself--but only AFTER his election--as Third Way--has hired many of the people who worked for Clinton, from Rahm on down. So, it's not surprising that you perceive Obama as on the same course.

However, IMO, Obama is somewhat to the left of Clinton on some issues and somewhat to the right of Clinton on others. He did, though, try to appear to be to left of Hillary during the primaries. And I fell for it.

In hindsight, I guess I would still have backed him 2007-2008 because what played a big part in my choice then was picking the candidate for the Democratic nomination that I thought had the best chance of winning the election. And, I was correct on that count. Then again, who really knows? I don't think McCain Palin had a realistic shot of winning, maybe not against anyone.

[lark]

35. Bill actually passed FMLA as one of his first acts

What has Obama done for the working people that made our lives better so far? Nothing I can think of. HCR is nothing compared to what it should have been if he didn't pull everything important off the table. Nothing in the stimulus bill to enforce banks/ Wall St. redoing the toxic loans but everything to let them line their own pockets at our expense. Bill repealing Glass Steagal was a HUGE disappointment, but even after the demise of the economy, Obama putting the same exact people that engineered the largest theft in the world back in charge of our economy is stunning.

[lib2DaBone]

15. Oh Man.. I'm So Sorry.. ..my bad....

Hey, how did the Banksters make out on that deal..OK you say?

You say the Banksters got everything they wanted and you go screwed?

Well, that is "trickle Down"... just chalk it up to experience... you have experienced democracy first hand... praise god to St. Ronnie...

[bananas]

16. Is Larry Summers a voodoo economist on climate (Part 5) and does it matter?

From Joe Romm at Climate Progress last year:

http://climateprogress.org/2009/01/27/is-larry-summers-a-voodoo-economist-on-climate-and-does-it-matter/

Is Larry Summers a voodoo economist on climate (Part 5) and does it matter?
January 27, 2009

Yes and no.

Larry Summers is widely regarded as a very brilliant economist. I can’t dispute that. He was also the lead horse among the economists in the Clinton administration who were using every trick they knew to undermine any serious effort toward negotiating an international agreement on restricting greenhouse gases in Kyoto, Japan (see here and below).

He appears to remain firmly in the camp of most MEOWs (Mainstream Economists who Opine on Weather) in that he

* Doesn’t understand climate science enough to realize how dire the situation is
* Doesn’t propose remedies that would avert the irreversible catastrophe we face.

<snip>

I remember Bill Clinton explaining at an October 1997 Georgetown conference why he ultimately ignored the advice of his economists. Clinton said his economic team had assured him that his balanced budget plan would be a job killer, so he pretty much took everything they said from that point on with a grain of salt. He concluded, “I’m convinced that the people in my Energy Department labs are absolutely right.”

<snip>

During 1997, I helped oversee a study by five U.S. national laboratories that examined what an aggressive technology-based strategy built around energy efficiency and renewable energy could achieve in terms of emissions reductions. That “Five Lab Study” concluded that the United States could meet the most aggressive Kyoto target being considered without raising the nation’s overall energy bill.

<snip>

Yes, Summers hated the Five Lab Study. He had junior economists in the Administrations trash it openly and behind the scenes. In the one principals meeting I was allowed to attend on climate in a mostly be-seen-but-not-heard mode — I was a lowly acting assistant secretary while he of course was a Deputy Secretary and never the twain shall meet — he disparaged the notion that an aggressive technology strategy was a game changer in terms of overall mitigation costs. In retrospect, this is actually kind of funny/sad since, like most MEOWs, he strongly endorses a big R&D program, but simply doesn’t believe existing or near-term technology matter. Like President Bush and indeed most conservatives, it is only nonexistent technology that MEOWs believe in, not existing technology.

<snip>

http://climateprogress.org/2009/01/08/economists-are-part-of-the-problem-part-1-robert-stavins-cant-walk-and-chew-gum-at-the-same-time/

Economists are part of the problem, Part 1: Robert Stavins can’t walk and chew gum at the same time
January 8, 2009

<snip>

In an otherwise excellent New Yorker article on Van Jones’ efforts to push a green jobs agenda, which I will blog on separately, Elizabeth Kolbert feels compelled to “balance” Jones with some people who don’t think it’s a good idea to simultaneously address the climate problem and the poverty/jobs problem. Who else could a respectable journalist turn to than an economist, a profession that arguably has cost the country and the world more jobs than any other?

Indeed, I remember Bill Clinton opining at a Georgetown conference in 1997 on why he ignored the advice of Administration economists, like Larry Summers, who urged him not to adopt a serious greenhouse gas emissions target at Kyoto. Clinton said his economic team had assured him that his balanced budget plan would be a job killer, so he pretty much took everything they said from that point on it with a grain of salt.

<snip>

[No Elephants]

22. This is about as sincere an admission as "The devil made me do it."

[DallasNE]

25. On Balance President Clinton Had A Remarkable Record

On the economy and there is no greater testament than the 22 million jobs added during his 8 years. But that doesn't mean that there weren't some blemishes as well. Signing the Glass-Stegall repeal was one and the mistake he admits on derivatives is another. Make no mistake though. A much bigger factor was the lack of enforcement on remaining regulation, particularly with Cox at the SEC, and the outright fraud being charged against Goldman-Sachs. These compounded thing greatly making it necessary to keep the eye on the ball and not exchange in frivolous discussion on what if items that are insignificant in comparison.

[mvd]

26. That's why I don't understand why..

President Obama took in Geithner and Summers, both with dubious oversight records. During the campaign, Obama had progressive economists in his team, but let them go. I still wonder if Obama is keeping Geithner and Summers under watch while using their knowledge of the industry. Hope so, because it's not consistent with the records of Summers and Geithner to change the system too much.

[DallasNE]

28. I'm With You

Obama does have Laura Tyson and Paul Volker as advisors so he is getting competing counsel from other powerful sources. So far the arrangement seems to be working pretty well.

[No Elephants]

31. If you look below the surface, Poppy Bush, for all his faults, had

worked on setting the economy up for recovery (even if he didn't know how bar codes at JC Penney check out counters worked).

And the economy also did well during Clinton's tenure because the effects of some of his policies, like NAFTA and repeal of Glass Steagall, did not begin to hit the U.S. hard until after Clinton left office. And still have not been fully felt--much like the trickle down and small government policies of Reagan did not really hit the fan until well after the beloved Ronnie was long gone and continue to haunt us and will continue to do so bc neither Clinton nor Obama changed them (too big to fail, for example).

And, don't forget, Clinton had a penny-pinching Republican Congress, something folk like Newt Gingrich and Joe Scarborough never tire of saying. And no very costly and long wars, as both Dummy and Obama have had (by choice or otherwise is not the point here)

A recession was, however, beginning somewhat before Clinton welcomed Dummya to the WH for the pre-inaugration breakfast (and then started acting like he was Poppy Bush's long lost son).

So, in all, I think Clinton's impact on the economy may not have been as as positive as it may appear on the surface.

[DallasNE]

32. Stop Drinking The Kool-Aid

Few things have a lead time of more than 9 months so the direction of changes would have been well established during the Clinton administration. Like Eliot Spitzer has said, lack of enforcement of existing law during the Bush administration was the real problem and now we are seeing the accuracy of that with charges being filed against none other than Goldman-Sachs.

[No Elephants]

36. You are just wrong. Many policies that ultimately brought us where we are started under Ron.

[Odin2005]

27. BS, this protege of TPTB-apologist Caroll Quigley knew EXACTLY what he was doing.

You allied yourself will the Corporate Elite as far back as college, Mr. Clinton; now lie in your shit.