Dwolla, Lending Club, Housing, and Women Should Block Summers at the Fed

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Larry Summers

New Orleans  It is hard to believe that there is really a campaign in earnest to push Larry Summers as the new Chairmen of the Federal Reserve, and that President Obama seems to be somewhat supporting his candidacy.  Admittedly, the other front runner is a distinguished woman, the economist Janet Yellin, is also being targeted by a sexist, “can a woman really manage the nation’s money,” kind of campaign by Summers supporters, which pushes me in her direction, but frankly I’d go for an old shaggy dog before Summers.

            Let’s say that even if some believe we should forgive him for his argument that women were not as capable as scientists that led to his losing his job as President of Harvard University.  His record of toadying up to the big banks, where he is and  has been and is now a frequent consultant, so that the housing crisis was left to them to mangle and prolong causing pain and financial devastation to millions of homeowners, even as he helped orchestrate the banks’ bailout, should also disqualify Summers from being their primary regulator and money manager in the future.

            His mentorship with Facebook’s billionaire Sandberg of “Lean In” rather than Push Back fame, has connected him to tech-based startups, but let’s look a bit harder at them than the newspapers have.

            Lending Club, where he is an advisor and board member, calls themselves a peer-to-peer lender, meaning that they move loans to borrowers directly from investors without the whole middleman mess of banking regulations or even usury laws in seems.  Looking at Lending Club it turns out that the interest rates for these loans are blatantly predatory, starting around 14.5% and going up as high as 30%.  Yes, there is a lending gap for smaller businesses, created by the kind of banking policies championed by Summers, and, yes, Lending Club is growing like topsy because of it, with more than a billion in loans outstanding, but does this make Summers someone who is going to look at lending discrimination, enforce the Community Reinvestment Act, and stop predatory lending, which are also among the Federal Reserve charges.  I don’t think so.

            He’s on the board as well of Dwolla, an Iowa based operation, that moves money cheaply.  I was inclined to like this operation, because I thought they were mimicking the hawalla system of money transfer at lower costs, and perhaps there’s hope, but most recently they received a subpoena barring them from moving money directly between accounts to facilitate the bitcoin, virtual currency schemes.  Yes, credit card companies and banks are scamming billions from consumers in fees on transactions that are not supported by the real costs, and Summers is also tied into Square, which is a wonderful improvement on both rates and retail point-of-sale systems, but sketchy and the Federal Reserve are not what we really want.

            Finally, let’s go with his reputation, much reported and documented, of always having to be the “smartest guy in the room” and legendary intolerance for dissent, criticism, and other opinions.  His fans say he’s changed, and god knows, the fictional performance in the movie, Facebook, where he turned a deaf ear on the Winkleloss twins was classic, though now that he’s flirting with enabling their bitcoin mischief, he would have probably been willing to spend hours with them these days, but do we really want someone running the Federal Reserve with that kind of impact on our economy, banking system, and money supply to be someone who had to learn how to listen and play well with others? 

            Our voices will need to finally be heard.  Let’s make history with a woman, who has a reputation for toughness and listening, rather than the bully from Boston with his fingers in every pot, women marching with signs in protest, and wreck and ruin throughout the country in his wake. 

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