Lawrence Summers on Economic Crisis at the Global Alpha Forum
Before he was a managing director at the D. E. Shaw Group, and before he was president of Harvard University, Lawrence Summers was Secretary of the Treasury when Long Term Capital Management collapsed.
In mid-September, he spoke at the Global Alpha Forum in Greenwich, CT, firmly stating that, at that time, there was no consideration whatsoever of providing a government bailout to LCTM. He says, “We did have a sense that there was a tremendous coordination problem, and if everyone found a way to stand down and not rip all the assets out of LTCM, more or less everybody would be better off.”
Regarding the current crisis, Summers urges “humility” and notes: “Until March 2008, there had been no contingency plan for the unwinding of a major broker-dealer.”