Obama’s Economic Adviser, Larry Summers, Too Cozy With Wall Street

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A new story is breaking about Larry Summers, the President’s hand-picked Economic Adviser and mentor to Tim Geithner, the new Treasury Secretary. It seems that Mr. Summers has a very tight relationship with Wall Street firms receiving over $5 million from a hedge fund and $100s of thousands in speaking fees from other banking and investment firms.

Hedge Fund Millions for Summers

The Wall Street Journal is reporting today,

“Mr. Summers joined D.E. Shaw Group in late 2006 as a managing director. He helped develop strategies including new businesses and also helped evaluate investments for the New York firm, which oversees about $30 billion in assets, making it one of the biggest hedge-fund managers in the world. A D.E. Shaw spokeswoman couldn’t be reached for comment.”

It must be noted that within the argument that Wall Street firms having their hands in too many pies must not be allowed to fail and therefore deserve tax payer support, D.E. Shaw as “one of the biggest hedge-fund managers in the world” would certainly qualify.

I wonder if D.E Shaw is on the list of “counter-parties” that got bailout money from AIG or any other TARP recipients?

Talk, Talk, Talk and Get Big Wall Street Bucks

Larry Summers over the last year has given many speeches and received a ton of money from the same folks he is now been charged with giving the President and the Treasury Secretary advise on.


That’s not just a little bit of a “conflict of interest”?

Here’s the list thanks to the HuffingtonPost.com,

Skagen Funds, $60,300, (1/9/2008)

Skagen Funds, $60,300, (1/10/2008)

Skagen Funds, $59,400, (1/11/2008)

JP Morgan, $67,500, (2/1/2008)

Itinera Institute, $62,876 (1/8/2008)

Citigroup, $45,000 (3/3/2008)

Goldman Sachs Co., $135,000, (4/16/2008)

Associon de Bancos de Mexico, $90,000, (4/3/2008)

Lehman Brothers, $67,500, (4/17/2008)

State Street Corporation, $45,000, (4/18/2008)

Siguler Guff & Company, $67,500, (5/7/2008)

Hudson Institute, $10,000, (05/28/2008)

Citigroup, $54,000, (5/30/2008)

Investec Bank, $157,500, (6/13/2008)

Goldman Sachs, $67,500, (6/18/2008)

Lehman Brothers, $67,500, (7/30/2008)

Tata Consultance Services, $67,500, (9/21/2008)

State Street Corporation, $112,500, (10/2/2008)

McKinsey and Company, $135,000, (10/19/2008)

Charles River Ventures LLC, $67,500, (11/112008)

Pricewaterhouse Coopers, $67,500 (9/9/2008)

American Chamber of Commerce In Argentina, $135,000 (10/7/2008)

American Express, $67,500 (5/7/2008)

Obama promised during the campaign lobbyists would see serious roadblocks in his Administration. I guess he meant since he’d hire all of them to be in his staff!

I think it is about time we aim “populist rage” away from legal retention bonuses and toward the same political cronyism and fat-cat Wall Street favoritism that got us into this banking mess in the first place.

If the general population understood this banking meltdown was caused by the Fed and Wall Street’s “easy credit” which predictably created the housing bubble – burst cycle, then they would be outraged at the right folks.

If I give a kid a few beers and the keys to a Maserati, I know the outcome. A crash. Sure some fun before the crash, but the crash is foreseeable. So I would be investigated, indicted, and go to trial where I’d most likely be found guilty. Sure the kid is guilty, but I’m “more guilty” as I am the more knowledgeable, less impaired party.

Now assume I got paid to do it. The prosecutor would be outraged. He’d add a count of attempted murder to the list of charges even if the kid didn’t die in the crash. He’d throw the book at me.

The subprime debacle is the same. The kid(s) are the borrowers and I am Wall Street giving them the intoxicating subprime loans. Then the Fed steps in with the Maserati of 15 rate cuts to seal the fate of this kid and many like him. Many crashes will ensue and everybody knew it. But since there are billions on the line, it was done without a second thought.

Wall Street and the Fed tried to “murder” us financially…and no prosecutor has even been asked to investigate.

After the crashes, Wall Street and Greenspan (and now Bernanke) want to feign ignorance. The Wall Street spin-machine created and propagated the story, “Nobody saw this coming”. It made the cause look like it was not “man-made” when it clearly was. Just because there is no single company like Enron to go after, doesn’t mean the Justice Department has no place here.

Where are the investigations into manipulations of the housing market through the credit markets? Enron was manipulating the energy markets and heaping huge profits. Remember the summer of rolling black outs? They then went too far and the system crashed along with their company.

Why are the Fed and Wall Street’s antics any different?

They aren’t…but Wall Street has more friends in high places…that’s all.

Mr. Obama, you need to uncouple your administration from Wall Street immediately and call for a special prosecutor to investigate the manipulation of our housing market through the Federal Reserve and other Wall Street players.

Ha ha!

I lost my head there for a minute…how silly of me.

If Obama did that he’d have to investigate half of his own staff.

Silly rabbit, tricks are for kids.

See ya next week!

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About Author

Rob K. Blake, a 15 year veteran of the mortgage industry, is a renowned public speaker, author, and former radio talk show host. His blog, TheMortgageInsider.net, is dedicated to educating mortgage consumers, mortgage providers, and investors about both mortgage and housing markets.


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