Saturday, April 4, 2009

Summers Was Paid $5.2 Million in Past Year by Hedge Fund; Owned "Asset" in Nouriel Roubini Firm

Top White House economic adviser Lawrence Summers received about $5.2 million over the past year in compensation from hedge fund D.E. Shaw, and also received hundreds of thousands of dollars in speaking fees from major financial institutions and other organzations.

A financial disclosure form released by the White House Friday afternoon (Friday afternoon. Got that?) and first reported on by WSJ shows that Summers made frequent appearances before Wall Street firms including J.P. Morgan, Citigroup, Goldman Sachs and Lehman Brothers.

In total, Summers made a total of about 40 speaking appearances to financial sector firms and other places, with fees totaling about $2.77 million. Fees ranged from $10,000 for a Yale University speech to $135,000 for an appearance paid for by Goldman Sachs & Co.

Probably the most curious item on the disclosure form is that Summers appears to have owned stock in Nouriel Roubini's firm Roubini Global Economics. Summers shows that before he joined the White House, he sold an asset in Roubini Global Economics for a capital gain of between $15,000 and $50,000. This strongly suggests that Summers had an equity position in the firm. The form also shows that he was an advisor to the board of Nouriel's RGE Monitor and that he recieved advisory board compensation of $147,500 from Roubini Global Economics.

Given these new disclosures, it is interesting to note Roubini's recent comment to NYT:

Mr. Roubini believes that the Treasury’s plan does not preclude nationalization at all. Rather, he said, it will help to clear the way to full government takeover of some troubled institutions.

“I see the option of nationalization” and the one presented by the Obama administration “as being complementary,” Mr. Roubini said. He believes that the stress tests the government plans on conducting on the banks will reveal which are solvent and which are insolvent.

In his view, those banks that are deemed insolvent will not participate in the toxic-asset plan and will be taken over by the government. Banks deemed solvent will be the ones that get to participate.

Nationalization “is fully on the table for banks that are insolvent,” Mr. Roubini said.
A special shout out goes to Lila Rajiva who has been on to Roubini for sometime and wrote in a comment to an EPJ blog post:

I don't know what the financial press actually do, besides taking dictation....

By the way, I think Roubini is one of the "designated" doom and gloomers myself...

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