Naked Capitalism has the article Larry Summers’ Contradictory and Dishonest Defense of Administration’s Bank-Focused Crisis Response.
If you are going to succeed in rewriting history, a necessary condition is that the public doesn’t remember it very well. Unfortunately, that requirement is not in place for the architects of the Administration’s blatantly bank-friendly crisis responses.
This article gives a very thorough description of why I am so upset with the way the Obama administration has handled the financial crisis.
Adam Levitin, Georgetown law professor and special counsel to the Congressional Oversight Panel, has a more detailed takedown of the Summers article. Levitin, a bankruptcy expert, objects strenuously to Summers claiming that he [Summers] supported “cramdown”. In all other types of collateralized consumer lending, when a borrower is in bankruptcy, the loan is written down to the value of the collateral and the rest is treated as unsecured and written down based on how much the borrower has left to pay off all unsecured loans. Cramdown was seen by supporters as the best way to cut the Gordian knot of considerable complications and bad incentives impeding the restructuring of mortgages.
Remember that Elizabeth Warren was head of the Congressional Oversight Panel (COP). As a bankruptcy expert herself, you can imagine how upset she must have been that the administration and Congress essentially ignored the advice COP was giving at the time.
Summers and Geithner are still trying to deny how little they understood the history of successful solutions to financial crises in the past.