Clinton Wants Healthy Banks Encouraged to Repay TARP (Update1)
By Hans Nichols
May 13 (Bloomberg) -- Former President Bill Clinton urged the Obama administration to make a “genuine effort” to encourage healthy banks to repay the Troubled Asset Relief Program so financial institutions can set executive compensation without fearing a public backlash.
“Give them a chance to pay it back and maybe just give it back without the interest or anything else,” Clinton said in an interview with Bloomberg News. The government could say, “You’re back on your own; pay whatever you want” to executives, he said.
The administration should “go back to all these TARP recipients who in effect were told by” former Treasury Secretary Henry Paulson to accept funds and let them repay loans, Clinton said. “The people who were told by the previous government that they had to take the TARP money, once these restrictions came down, they should have had the opportunity to give the money back to avoid” government interference on pay for executives and other matters.
The former president also said in the interview, after appearing on a panel at Brookings Institution in Washington, that Larry Summers, Clinton’s last Treasury secretary, would make a good chairman of the Federal Reserve. He said he also likes Summers in his current role as head of President Barack Obama’s National Economic Council.
“I like knowing that he’s where he is,” Clinton said, “for the simple reason that he lived eight years through this system we set up.” Asked if Fed Chairman Ben S. Bernanke should be reappointed, Clinton said, “That’s beyond my pay grade. Whoever the president appoints is fine with me.”
Views on Greenspan
Clinton defended former Fed Chairman Alan Greenspan and said that as president, he made “absolutely” the right decision to reappoint him. Still, he faulted Greenspan for arguing against regulation by the Securities and Exchange Commission of derivatives trading and said that he regretted not challenging the Republican-controlled Congress to insist on regulation.
“He was wrong about one thing,” said Clinton, citing Greenspan’s position on derivatives regulation and how he persuaded Clinton’s economic advisers to adopt a hands-off approach. “I regret that and even though I could not have succeeded, the Republicans would have blocked me, I wish I really would have raised a lot of Cain about that.”
