Former US Secretary of Treasury Former President of Harvard 2008 Stock Market Collapse KEY FAILURE Larry Summers's role in the deregulation of derivatives contracts - On May 7, 1998, the Commodity Futures Trading Commission (CFTC) issued a Concept Release soliciting input from regulators, academics, and practitioners to determine "how best to maintain adequate regulatory safeguards without impairing the ability of the OTC (Over-the-counter) derivatives market to grow and the ability of US entities to remain competitive in the global financial marketplace." On July 30, 1998, Deputy Secretary of the Treasury Summers testified before congress that "the parties to these kinds of contract are largely sophisticated financial institutions that would appear to be EMINENTLY CAPABLE of protecting themselves from fraud and counterparty insolvencies." Summers, like Greenspan and Rubin who also opposed the concept release, offered no proof that the contracts would NOT BE misused by financial institutions. Instead, Summers stated that "to date there has been no clear evidence of a need for additional regulation of the institutional OTC derivatives market, and we would submit that proponents of such regulation must bear the burden of demonstrating that need." This argument suggests that the default position in the disagreement was that Summers, Greenspan, and Rubin were right, and that anyone (ie, Brooksley Born) who disagreed with them bore the burden of proving their position. In fact ...
