Summers: First Republic Bank Rescue Package Seems ‘Corporatist and Deal-Based Between the Government and Big Banks’

During an interview aired Friday on Bloomberg Radio’s “Wall Street Week,” a Harvard professor, economist, director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers stated that the First Republic’s bailout package “wasn’t an assessment.” objectively for the private sector to gain confidence in the First Republic.” And “it seemed to me like a small figure based on dealings between the government and the big banks.”

Summers said, “It was JPMorgan and a number of other banks that were apparently accepted by the secretary and JPMorgan. I don’t know what to do with it. The government committed to putting money there at par over the market value of securities for a year. Fact.” That the banks have committed for 120 days so they can get out well before the government at an interest rate we don’t know yet, with what the understandings are in the agreement with the Treasury Department. I suppose representing everyone would make people a little more confident. But it made me nervous. That wasn’t an assessment. Objectively for the private sector to get a trust in First Republic. So, I’m not sure what I’m doing. It seemed to me just a small business and dependent on dealings between the government and big banks. But we’ll have to see how that unfolds. I hope there’s complete transparency in all understandings.”

He follows Ian Hanchett on Twitter @tweet

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