Spitzer: Geithner and Summers failed

The Obama Administration did not start working on a plan to regulate the major financial industry until last week, former (D-NY) Governor Elliot Spitzer said on the Colbert Report last night.

“The real problem is that the White House – until last week – had not even begun to do what was critically necessary to restructure our financial services sector,” Spitzer said.  “Many people were begging [Obama] to do it, and I will say very clearly, the team of Summers and Geitner has been, in my view, an abject failure because what they have done is take all the money and give it right back to the banks without demanding that the banks change the way they do business.”

When Colbert asked whether more government regulation would discourage Wall Street from pulling the country out of recession, Spitzer said:

“The reality is that these bankers created a system: a bubble that collapsed leaving us with no net job growth, flat medium family income, we have exported our manufacturing sector…  And the President of the United States needs to go to China like a high school student asking for his allowance.  We are borrowing from China to keep ourselves going, and this is the economy [the major investment banks] created.

“What we should do… is restrain their behavior and say, ‘If you get bailout money, if you get guaranteed access to federal credit… then you must lend that money – not get involved in proprietary trading and the casino economy.”

Spitzer served as the New York State Attorney General from 1994 to 2004.  He most notably pursued cases against companies involved in investment bank stock price inflation (Enron), predatory lending practices by mortgage lenders, fraud at American International Group (AIG), and the 2003 mutual fund scandal.   A prostitution scandal forced him to resign from NY Governor in 2008.

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One comment

  1. Banks no more “created” a system that collapsed than did the United States “create” a system leading to W.W. II. To reduce complex financial systems to a Comedy Central soundbite is ignorant and serves no one. Shame on him. Just throw up some red meat for the 15 second intellect absorbing crowd to take in. I assume he mentioned nothing about meltdown of Fannie Mae or Freddie Mac or the Community Reinvestment Act, or a Democratic controlled House who made the conscious decision not to investigate these entities back in the early part of the decade, when change may have done some good. Of course not – those dung heaps are at his door.

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