Summers: I Don't Want To 'Supplant Or Replace' Markets
National Economic Council Director Lawrence Summers defended the Obama administration’s approach to the financial crisis while laying out some of the thinking behind its upcoming proposal to overhaul financial regulation today, The Post's David Cho reports.
He said the initiatives to rescue banks, insurers, automakers and big Wall Street firms was out of “necessity not choice.” The goal was to prevent the financial system from collapsing due to its own excesses.
"Our objective is not to supplant or replace markets," Summers said at the Council on Foreign Relations in New York. "What is crucial and where our focus has been as we have intervened when necessary is on the intervention being temporary, based on market principles, and minimally intrusive.”
President Obama is set to announce on Wednesday his plan to overhaul the financial system. Summers argued that the reforms are needed to restore confidence in the U.S. financial system.
Summers briefly touched on some of the major elements of the plan including creating a superregulator to manage risk across the financial system. He compared the idea to establishing a “free safety” in football who could look across the field and plug holes.
The plan will also propose that regulators impose stronger capital requirements that will make it harder for banks to make dangerous investment bets with borrowed money, have the authority to wind-down financial firms that do not currently fall under the purview of regulators, and oversee consumer protection in a more focused manner.
Summers was not specific about how this would be done or about which agencies would be eliminated or enhanced.
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