President Barack Obama’s chief economic adviser on Sunday
offered a defense of Clinton administration policies deregulating Wall
Larry Summers, who was Treasury secretary in the latter years of the Clinton administration, said policies enacted by George W. Bush’s administration had more to do with the financial crisis than Clinton’s policies.
As an example, Summers mentioned the decision by the
Securities and Exchange Commission to allow investment banks to increase the
amount of debt they can take on in relation to their assets. The Securities and
Exchange Commission is an independent body.
Summers then said it was much more important to put in place legislation to prevent a future crisis than to find fault with the past. He said the Wall Street reform bill that is set for a key procedural vote in the Senate on Monday would do so.
Clinton administration critics on the left have said the
administration was wrong to lift restrictions that prevented banks from
offering commercial banking, insurance and investment services.
The Glass-Steagall Act prevented banks from offering all of these services, but key provisions were repealed in 1999. Summers and the administration supported those moves at the time.
Former President Bill Clinton recently said he received bad advice from Summers on derivatives, another key part of the financial reform legislation now under consideration.
Clinton said it was wrong to think rules on derivatives did not need more transparency.
“I think they were wrong and I think I was wrong to take” their advice, Clinton said in an interview last week with ABC’s “This Week.”
Summers and his predecessor as Clinton’s Treasury secretary, Robert Rubin, had argued that only a handful of people would be buying derivatives and they didn’t need extra protection, Clinton said.