Summers: Obama doesn't want to sell cars
"I have no interest in managing the banking system – or, for that matter, running auto companies or other private institutions," he said Tuesday.
So why exactly do US taxpayers own a rather large insurance company, two giant mortgage-backing corporations, significant shares of America's leading banks, 8 percent of Chrysler, and soon a controlling interest in General Motors?
Reasons for the spree
"We only act when necessary to avert unacceptable – and in some cases dire – outcomes," he told the Council on Foreign Relations. "The actions we take are those of necessity, not choice."
Furthermore, these moves are temporary, he said. "Our objective is not to supplant or replace markets. Rather, the objective is to save them from their own excesses and improve our market-based system going forward."
Fear of rules
To critics, of course, giving the White House the chance to "improve our market-based system" is like crashing a wedding with a wrecking ball. The regulatory burden they fear is, to the administration, the necessary rulemaking for a system that's not proven to be self-correcting.
"Our financial system is not fail-safe until it is safe for failure," Mr. Summers said.
Among the regulatory changes that the administration intends to push for: monitoring the entire financial system, getting the authority to intervene when the stumbles of any financial institution threaten the system, ensuring that firms have adequate capital, eliminating regulatory overlap, and improving consumer protections. (Hat tip to Wall Street Journal blogger Damian Paletta for laying them out succinctly.)
All this will be complex – not unlike, say, running an insurer, two car companies, and a couple of mortgage-backers.
Getting the regulations right will be tough enough. Navigating the politics and the pressures from bureaucrats and industry lobbyists is proving harder.
Maybe changing the world is easier.
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