“I think they were wrong and I think I was wrong to take” their advice.”

-President Bill Clinton, April 18, 2010 on on ABC’s “This Week.”

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In Bailout Nation, I held Bill Clinton, and his two Treasury Secretaries, Robert Rubin and Larry Summers, responsible for signing the ruinous Commodity Futures Modernization Act that exempt Derivatives from all regulation and oversight. The CFMA was passed as part of a larger bill by unanimous consent, and that Clinton signed on December 21, 2000.

Bill Clinton now joins Alan Greenspan in admitting his contribution to the credit crisis.

The former president admits his error: He said his Treasury Secretaries — Robert Rubin and Lawrence Summers — were wrong in the advice they gave him about regulating derivatives. And, he was wrong to follow their advice.

Bloomberg has the details:

“Their argument was that derivatives didn’t need transparency because they were “expensive and sophisticated and only a handful of people will buy them and they don’t need any extra protection,” Clinton said. “The flaw in that argument was that first of all, sometimes people with a lot of money make stupid decisions and make it without transparency.”

“Even if less than 1 percent of the total investment community is involved in derivative exchanges, so much money was involved that if they went bad, they could affect 100 percent of the investments,” Clinton said.”

Clinton doesn’t only throw Rubin and Summers under the bus — he also blames his successor, George W. Bush:

“Clinton also said the Bush administration contributed to the financial crisis with lax regulation.

“I think what happened was the SEC and the whole regulatory apparatus after I left office was just let go,” Clinton said. If Clinton’s head of the Securities and Exchange Commission, Arthur Levitt, had remained in that job, “an enormous percentage of what we’ve been through in the last eight or nine years would not have happened,” Clinton said. “I feel very strongly about it. I think it’s important to have vigorous oversight.”

He certainly has a point about the SEC — the Bush appointees for SEC chairman ranged from bad to worse.

Other actors who have yet to come clean include Harvey Pitt, Hank Paulson, Phil Gramm and George W. Bush. I am not holding my breath waiting for any of their mea culpas . . .

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Previously:
Who is to Blame, 1-25 (June 29th, 2009)
http://www.ritholtz.com/blog/2009/06/who-is-to-blame-1-25/

Source:
Clinton Says Rubin, Summers Advice on Derivatives Was ‘Wrong’
Joshua Zumbrun
Bloomberg, April 19
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVN001cNkLMA

Category: Bailout Nation, Bailouts, Derivatives, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

24 Responses to “Bill Clinton: Derivatives? My Bad…”

  1. [...] The Big Picture: Bill Clinton: derivatives? My bad… [...]

  2. Init4good says:

    King of Greed slime = Phil Gramm IMO

  3. call me ahab says:

    good post-

    I miss ol’ Clinton- and sure- plenty of blame to go around- but things always look clearer in hindsight-

    just like looking at an historical chart of SPX- you always know where the best entry and exit points are

  4. b_thunder says:

    Per ABC News, ‘Clinton’s office called after it posted its story to say “the former president sees former Federal Reserve Chair Alan Greenspan as the one who mainly led the charge against regulating derivatives.”‘
    Now word on Phil Gramm…

  5. Patrick Neid says:

    What a pathetic loser. He should be forced to walk around in a blue dress–well at least he will be in the history books.

    Clinton mouths an apology because it shines the light on himself. This is simply Rwanda number 5 or 6. Right now he out there trying to drum up some violence for his next “I told you” moment.

    Just as bad are these phony apologies and contrition’s politicians and celebs make. Now if your family or close friends make an apology that is one thing but when politicians make one they are playing you for a fool. They give a shit. The only thing on Bill’s mind his getting his wife elected in hopes of burnishing his own reputation, which at this moment, a 100 years from now, will be only be about a blue dress.

  6. tawm says:

    Two lines constitutes Bill Clinton coming clean? Gimme a break…. Patrick Neid is spot on about that sneaky sh*t’s motivations.

  7. V says:

    Larry must have inspector gadget arms, as he is still driving the bus, despite being thrown under it.

  8. Moss says:

    Rubin had his chance and punted. Summers may come clean if he leaves the administration. 50-50 chance.
    The remaining actors will NEVER take any responsibility, it will be left for others to enunciate. Ideology is like religion and heresy is not in their character.

  9. Groty says:

    Clinton’s SEC didn’t stop Madoff. Clinton’s SEC knew about Stanford in 1997 but did nothing. Clinton’s SEC didn’t stop Blodget and Grubman. Clinton’s SEC didn’t stop Congress from tearing down Glass-Stegall. Clinton’s SEC did nothing to stop Enron, Worldcom and other frauds. Sarbanes-Oxley was created because of his SEC’s many failures.

    It’s perfectly obvious how his SEC would have prevented much of the damage. It had such a stellar record during his tenure. That’s pretty funny.

  10. DeDude says:

    It is probably easier for Clinton to admit that a lack of regulation and oversight was a mistake than it is for the right wingers. Their whole ideology is based on free market forces being good and gobinment being bad. So they would have to admit the flaws and limitations of their ideology.

  11. I love that even his mea culpa he blamed his Treasury Secretaries

    Not “I made a mistake,” but “I should not have listened to those guys.”

  12. ubnutsagain says:

    Let’s see now … Clinton says he was poorly advised and signed the Commodity Futures Modernization Act.

    OK, we got that … one man with a fountain pen.

    Now, howzabout those 535 members of the Republican controlled Congress that held all those important hearings about the bill, who thoughtfully debated its pros and cons, who lapped up the headlines and photo-ops surrounding it, who carefully studied each and every page of the proposed legislation before voting on it, and who then passed it … in both houses of Congress?

    No wonder scientists are looking for intelligent life out there in the universe.

  13. VennData says:

    The idea that there are derivatives that are “too unique” to be on exchanges defies Finance 101, that all securities can be reconstructed into various constituent parts. So in the exchanges current technological form, bonds currencies, derivatives etc should be traded on exchanges.

    In fact add to that Frequent flyer miles, credit card rewards, water, insurance products, annuities, home equity and anything else that possibly can be. Who will take the blame for home owner equity not being traded on exchanges?

  14. The Window Washer says:

    ….if Arthur Levitt, had remained in that job, “an enormous percentage of what we’ve been through in the last eight or nine years would not have happened,”

    Ask Brooksley Born about that. Just because Bush’s SEC people were bad doens’t mean his were right.

    Of all the people involved in the Great Blow-up Arthur is the only one that you don’t want to puke when looking at because he admitted his mistakes. So to backing the only guy that would stand up and say I don’t deserve it shows how Cliton is just spinning.

  15. theorajones says:

    Good for Clinton. And yep, he’s hedging on the apology, but let’s be honest, “I failed you” apologies like those of Richard Clarke are few and far between in American political life.

    It’s worth noting that Clinton came out of the “New Democrat” school of political thought. A lot of this movement was focused on moving Democrats closer to Republican positions on many issues. I think a lot of people would agree that in terms of policy, one of the places that New Dems were closest to Republicans was in the Reaganesque philosophy of deregulation for many industries–and most strongly the deregulation of Wall Street.

    The problem here is actually the bipartisan consensus. The “let’s give all the money to Wall Street and let them decide what to do with it” philosophy that started with Reagan and has become part of the political mainstream at this point.

    What’s incredible is that the mainstream Republican position is to double-down on their failed approach to national growth. They are desperate to water down an already watered-down bill that does the bare minimum when it comes to new regulations of Wall Street.

    What’s only slightly less incredible is that the Democratic Party isn’t at all willing to re-evaluate the bipartisan consensus and challenge the fundamental mistake we’ve made in our economy for the past 30 years: relying on Wall Street bubbles as engines of growth. They are willing to tweak the worst excesses of the bubble-as-growth approach in their Wall Street reform (which the Republicans, unbelievably, aren’t), but they still aren’t willing to take on the structural weakness that has been revealed by our current catastophe: that we rely too much on Wall Street as a source of growth, and we’re systematically under-investing in the public goods and failing to support the distributions of wealth that drive more sustainable and long-term growth.

    One of the sources of our current economic malaise is the fact that middle class incomes have stagnated for the past 10 years, and the fact that we’ve been running our government on borrowed money so we can finance tax breaks for the uber-wealthy and for lower income people’s funds that are invested in Wall Street vehicles (pensions, 401ks, etc). It’s simply incredible that no one appears willing to take those two issues on directly.

  16. dr.j says:

    These pathetic apologies for the obvious are not even worth printing.

    “I am sorry I was in the dining room when the iceberg was spotted. I should have paid more attention to the warning horn. My navigator told me it looked small, from what he could see. I am sorry I paid attention to him. Thank God so many people bought my book and made me a wealthy man. A wealthy man who made very bad decisions. I feel, though, that the guy who took control after me was really, really lax in his oversight of icebergs. ..Oh, yeah, did I say I’m sorry? By the way, what is your sister doing tonight?”

  17. pulaski says:

    Clinton is a master of these type of apologies:

    See “Bill Clinton Causes, Feels Your Pain:” http://www.tinyrevolution.com/mt/archives/003240.html

    And for more hilarity and hoocoodanode
    and : http://www.tinyrevolution.com/mt/archives/002048.html

  18. Low Budget Dave says:

    Even today, the comments on this board indicate that people have just decided to blame Democrats, and ignore the facts. Phil Gramm wrote the bill, and Clinton signed it. But Clinton gets 100% of the blame, while Gramm gets 0%.

    Hundreds of people were pushing the bill so hard that they ended up making millions of dollars in bribes and kickback, or whatever else you call unregulated sweetheart deals. But when we go to assign blame, no one ever follows the money.

    They just keep following the blue dress no matter what the topic of conversation.

    And keep in mind that this is an intellectual blog. Imagine the comments on the teabagger blogs.

  19. call me ahab says:

    “Clinton is a master of these type of apologies’

    exactly- part of the dude’s charm

  20. dr.j says:

    It is not, Low Budget Dave, that people want to give the R’s a pass. It is that people are so sadly needy they think an apology is something more than hollow words from another phony.

    What is the obsession with “I’m sorry”? It is not necessary or helpful, it just takes our eye off the ball and gives the apologist an easy “get out of jail free” card.

    We all need to ask, “Why do we crave apologies from those who have caused great harm?” Does the Left actually care if Bush apologized? Or do we really like it because it is the sincerest form of groveling?

  21. dss says:

    Low Budget Dave has it right. There was a Republican controlled congress who pushed for deregulation and everyone forgets what the go-go internet economic climate was about in 2000. Viewed through today’s prism, it is easy to blame Clinton, when in fact it was Gramm, Greenspan, Rubin and Summers who pushed the hardest for the repeal of Glass-Steagall. The congress was too busy taking campaign contributions from the banksters to care about the long term implications.

    The economic climate at the time was free markets, free markets, free markets. Free markets was the answer to every economic problem from soup to nuts. Regulations were some evil socialist-commie construct that prevented the free market from doing it’s magic. We all know how that worked out. Free market capitalism for the Main Street, Socialism for Wall Street.

    This country has gone so far to the right that a Republican nominated, admitted Republican Supreme Court Justice John Paul Stevens is seen by the right as a “liberal”.

    At least Clinton apologized, you will never get an apology out of Bush or Cheney for their part in the worst Presidential administration in history.

  22. EAR says:

    Later in the interview he said…

    “… and I didn’t tell Monica to lie in her deposition. I told her to lie dere in dat position.”

    But seriously, wise of Bill to do a sorta mea culpa in the midst of SEC v. GS, financial reform week.

    The last Dem prez sorta admitting his mistakes, while the current administration takes on GS and the “our new ideology is to say no to everything and hope the teabaggers like it” party who is using the other side of the sheet of paper they wrote their HCR strategy on to write their financial reform strategy. “Let them own the past while a fairer future is formed” is the narrative, the actual future, as always, is anybodys guess.

  23. MikeG says:

    Gramm is on record as taking no responsibility and refusing to apologize or accept any blame for the massive financial wreckage resulting from his actions and efforts. He is one of the dirtiest corrupt scumlords ever to set foot in Washington.