Tuesday, November 18, 2008

Lawerence Summers and Timothy Geithner Will Face Tough Confirmation Hearings for Sec of The Treasury

Summers was instrumental in helping pass the Graham Leach Bliley that put the final nail in the Glass-Steagall Act. It allowed banks to offer investment banking and insurance services. It lead to some of the current problems that banks face. Some banks took on excess lending risks (knowing that the govenrment will bail them out) and invested in risky assets.

Mr Geithner was intensly and intimately involved with the current bailout process. It is clear that the bailout has not worked out as originally intended and cetain risks remain. The Republicans in the Senate should especially eschew Mr. Geithner's internventionalist bent.

Accoring to the WSJ:

Mr. Geithner is known as one of the most aggressive interventionists within the current group of crisis managers, at times preferring a more forceful government response than some government officials. In the case of Lehman, Mr. Geithner didn't want to rule out a government-financed intervention in the days leading up to the firm's demise, but Treasury officials told Wall Street executives that support was off the table.

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