The best evidence that Larry Summers is headed to the Federal Reserve is the enormous amount of new power the Obama Administration wants to hand over to the Fed. Are they really doing this so that it can be handed over to the relative outsider, Ben Bernanke? Not likely.
This is a power play by the ultimate troika, President Obama, Rham Emanuel and Summers.
Of course, there is a reaction to this power play from the corners of Wall Street and beyond that don't have significant influence at the table of the troika.
A report, by an alliance including two former heads of the Securities and Exchange Commission, a group of investors with a total $3,000bn in assets and the investment analysts’ trade body, has been leaked to FT.
The 39-page document, seen by FT, calls for the creation of an independent body to police risks across the financial sector, as opposed to the Fed gaining the power.
General Electric, and other quasi-- financial organizations would much rather operate under such a group where they can exert influence rather than under Summers. In addition to GE, the investor group includes senior executives from Calpers, the large Californian state pension fund, BlackRock, the asset management giant, and Legg Mason, the investment firm.
They are proposing a Systemic Risk Oversight Regulator that would have a full-time staff led by a chairman and four members appointed by the president and confirmed by the Senate, and would be accountable to Congress.
William Donaldson, a co-chair with fellow former SEC head Arthur Levitt of the Investors’ Working Group, told FT the new agency should have “carte blanche to go everywhere it wants . . . to find systemically weak areas within the system”.
Talk about an attempted power grab.
Bottom line, we have a major league turf battle going on here.
Oh yeah, ultimately, the battle is over your wallet.
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