Sunday, August 02, 2009

Why David Gregory’s Numbers Are Weak - Giving Summers a Pass on Bonuses

On Meet The Press, a brief exchange between Larry Summers and David Gregory perfectly encapsulates Gregory’s problem. He asked Summers, whose soporific style is hard to endure for more than a few minutes, about Wall Street bonuses. This is a good line of questioning - and a terribly neglected one. One of the great travesties (and news stories) of 2009 is the highway robbery perpetrated by the likes of Goldman Sachs.

Summers said some bankers are following his dictate to be upstanding citizens and “some aren’t.”

The obvious follow up is “which ones are and which ones aren’t?” And if Summers dodged that, Gregory should have named names himself, since it’s pretty clear who the worst offenders are.

But instead, Summers got a pass and rambled on with a few platitudes. I’m sure the recipients of the multi-million dollar bonuses were chucking at that softball segment…

UPDATE: Here’s the transcript:

GREGORY: Before you go, I do want to ask you about the banks. One of the things we’re seeing on Wall Street is that bonuses are back, a lot of people making a lot of money. You said recently that banks should never lose sight of their obligations to their fellow citizens. Are they meeting their obligations?

SUMMERS: Some are. Some aren’t. All need to pay attention to it. How? They need to make sure that they are cooperating and setting up the kind of financial regulatory system that will make sure there are the right risk controls and things like this don’t happen again. They need to each do their part with respect to foreclosure relief.

And we’ll see how different banks are doing when the numbers are reported this week. They need to recognize the needs of their communities as they set lend, as they set lending strategies. But they need to recognize what’s happened, how—what a near miss it was. And we hope they will join us in working to create the right kind of regulatory system.

And a crucial part of that regulatory system is an agency that protects consumers, that has as its focus not the health of banks, but something we haven’t had before.

And if we had, we wouldn’t have had these subprime mortgages in the same way; we wouldn’t have needed to pass a credit card reform bill to stop outrageous escalations in rates, which is a consumer financial protection agency. And I hope and trust that the banking industry will join—join in supporting that regulatory step and other regulatory steps to contain the risks so that never again do we have the problems we’ve seen in the last two years.

GREGORY: Would you like to be chairman of the Federal Reserve?

Topics: goldman-sachs, summers, wall-street, banks, gregory, mtp