Summers Urges Banks to Lend More, Says Recovery Pace ‘in Doubt’

A

ASusilovic

July 21 (Bloomberg) -- White House National Economic Council Director Lawrence Summers chastised some banks that received government aid for not doing enough to reduce foreclosures, while declaring that next year’s economic growth pace is “in doubt.”

“Prudent financial institutions will recognize that the profits they’re enjoying are in part a reflection of the commitment government and the broader society have made to the financial system that has enabled them to enjoy those profits,” Summers said in an interview with Bloomberg News yesterday in Washington.

While Summers, President Barack Obama’s chief economic adviser, didn’t identify any firms, he said the government will disclose names as part of reports on loans and foreclosures. Last week, Goldman Sachs Group Inc. reported record quarterly earnings, while JPMorgan Chase & Co. said it had second-quarter profit of $2.7 billion.

Separately, Summers, 54, said Obama hadn’t consulted him on the potential reappointment of Federal Reserve Chairman Ben S. Bernanke, 55. “The president will consult with whoever he wishes,” Summers said when asked whether he would recuse himself from conversations about the Fed post, for which he’s regarded by Fed watchers as a potential candidate.

Summers said the U.S. economy is “no longer in freefall,” and poised for recovery starting this year. The former Treasury secretary and Harvard University president cited recent increases in exports, and said fiscal-stimulus and foreclosure- relief programs will create a “gathering force” in the coming months.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ae2ts7VZVTs8
 
The way we got into this mess was the government telling banks what to do.
OK, great, "doing the same thing over again and expecting different results" = insanity.

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Banking-Law Debate Is Revived in Senate
By STEPHEN LABATON
Published: May 5, 1999

"We will oppose any effort to weaken or undermine the continued relevance of the Community Reinvestment Act," the President [Bill Clinton] said, adding that while the law has been on the books for two decades, "over 90 percent of the lending under it has occurred in the last six years in our Administration."
"I am very proud of that," he said. "It has not done anything to hurt bank profits, and we ought to stay with it".
 
Quote from countryBoy:

The way we got into this mess was the government telling banks what to do.
OK, great, "doing the same thing over again and expecting different results" = insanity.

nytlogo153x23.gif

Banking-Law Debate Is Revived in Senate
By STEPHEN LABATON
Published: May 5, 1999

"We will oppose any effort to weaken or undermine the continued relevance of the Community Reinvestment Act," the President [Bill Clinton] said, adding that while the law has been on the books for two decades, "over 90 percent of the lending under it has occurred in the last six years in our Administration."
"I am very proud of that," he said. "It has not done anything to hurt bank profits, and we ought to stay with it".
More...
If you understand about the mortgage business you will know that most of the loans made before 2004 were fine. The players found out by 2004 that they can game the system and make as much as they can before it collapsed. This is true of most legislations that someone will find or make a loophole in time and exploit it. It didn't help when the party in power was saying government was the problem at the same time the loophole was being implemented and exploited.
 
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