Larry Summers, a top economic adviser to President Barack Obama, is a realist when he says “people are imperfect and we have not seen the last misjudgment.”
So, in his view, financial regulatory reform is just as necessary as, well, laws aimed at ensuring safe driving.
He cites the late Senator Daniel Patrick Moynihan’s belief that people being people are probably going to drive fast and recklessly, and so it would be wise to encourage seat-belt use, build crash-proof bumpers, design highways more carefully, arrest people for drunk driving, and establish a system that made accidents less likely to result from human error.
“I think if you look at the approaches to financial regulation that we are pursuing, they place more emphasis on creating a system that is safe for failure and misjudgment,” Summers said at a Reuters Insider newsmaker forum.
“In a sense, insisting on low levels of leverage and more capital is a kind of speed limit,” he said.