Lawrence Summers Hearts Big Banks
Lawrence Summers is the director of the White House National Economic Council. Summers was interviewed by NewsHours. He came out strongly against limiting the size of the nation's biggest bank. Summers makes the hysterical argument that having most of America's money tied into a few banks is good. Summers spun a tale of pure bullshit.
LAWRENCE SUMMERS: That was the approach that America took to lending in the thrift sector before we had the S&L crisis.
Most observers who study -- who study this believe that to try to break banks up into a lot of little pieces would hurt our ability to serve large companies and hurt the competitiveness of the United States.
But that's not the important issue. They believe that it would actually make us less stable, because the individual banks would be less diversified and, therefore, at greater risk of failing, because they would haven't profits in one area to turn to when a different area got in trouble.
And most observers believe that dealing with the simultaneous failure of many -- many small institutions would actually generate more need for bailouts and reliance on taxpayers than the current economic environment.
Summers argues in favor of a monopony banking system. America broke up monopolies, such as Bell System, to protect cunsumers. During the Depression, the Glass–Steagall Act was signed into law by President Roosevelt. The law forbid commercial banks could not merge with investment banks. The Gramm-Leach-Bliley Act repealed the law prevent commercial and inventment banks from merging. Former President Bill Clinton admitted signing the Gramm-Leach-Bliley Act was a mistake. A fun little fact is Lawrence Summers was one of the people telling Clinton to sign Gramm-Leach-Bliley Act. The too-big-to-fail banks have a friend in Lawrence Summers.