Considering how eagerly the financial press solicits the views of the former U.S. Treasury secretary, Jeff Hauser and Max Moran would like reporters to ask him about his involvement with a crumbling company.
Larry Summers in 2014. (IMF, Flickr, CC BY-NC-ND 2.0)
By Jeff Hauser and Max Moran
Common Dreams
On Jan. 10, Cameron Winklevoss, a major cryptocurrency investor, publicly accused Barry Silbert, the CEO of cryptocurrency conglomerate Digital Currency Group (DCG), of engaging in an elaborate fraud to illicitly pump up the bitcoin holdings of DCG’s subsidiary, Genesis Global Capital.
The Securities and Exchange Commission (SEC) and Department of Justice have both opened early-stage investigations into DCG and Genesis, likely to look into similar claims. [On Jan. 12 the SEC brought charges against Genesis.]
The Revolving Door Project [of which author Hauser is founder and director] condemns fraud and hopes any retail investors will be made whole. But it doesn’t especially care if one crypto tech bro (Barry Silbert) happened to follow in the footsteps of Mark Zuckerberg to dupe a pair of crypto tech bro twins (Cameron and Tyler Winklevoss).
The Project does care about the individuals who are left as collateral damage. It also cares that Silbert, the architect of the alleged con, was advised by someone with whom the Winklevoss twins have an infamous history: namely, former U.S. Treasury Secretary Larry Summers.
According to How Money Got Free, a book about the rise of Bitcoin, Silbert brought Summers on as an adviser to DCG in 2016 specifically to open doors on Wall Street and to foreign banks for Silbert and his company.
At the time, Bitcoin was still widely (and rightly) seen as a gimmick at best and a scam at worst. But Summers’ support for Bitcoin made DCG, and Bitcoin, appear more respectable to investors, journalists, academics and regulators.
On Tuesday, we asked why the media keeps failing to ask Larry Summers about his work for shady crypto firm DCG.
Yesterday, the @SECGov charged DCG subsidiary Genesis with operating an illegal lending service.@LHSummers, any comment?https://t.co/Dv3X95QCtf
— Revolving Door Project (@revolvingdoorDC) January 13, 2023
Summers worked with DCG for over six years. Particularly last year, during a high point for Bitcoin and crypto more broadly, he issued widely-reported public pronouncements about the crypto industry, including declaring that Bitcoin “is here to stay.”
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Summers also called for new regulation of the crypto industry, saying “I think it’s a recognition that all industries need to come to that are systemic in their importance.” This call for new, crypto-unique regulation is actually in line with figures like Sam Bankman-Fried’s strategy at the time to establish a crypto-specific regulatory regime.
This would have both institutionalized crypto as a permanent and systemically important part of the financial system and held it to a separate, likely softer, standard than run-of-the-mill securities.
Securities and Exchange Commission headquarters in Washington, D.C. (Scott S, Flickr, CC BY 2.0)
Very few journalists, especially in the mainstream non-crypto-focused media, ever disclosed Summers’ connections to one of Bitcoin’s most prominent businessmen while quoting his views.
In fact, DCG is just one of several crypto-related firms to which Summers lent his name and reputation. Now, as DCG and the broader industry implodes, Summers’ name has mysteriously vanished from the company’s website.
The crypto news website Protos also reported that Summers quietly removed any mention of DCG from his personal website after being contacted by Protos about his sudden disappearance from DCG’s site.
Co-Founders at Winklevoss Capital, Tyler Winklevoss (L) and Cameron Winklevoss speak onstage during TechCrunch Disrupt NY 2015. (Noam Galai/Getty Images for TechCrunch/Wikimedia Commons)
Considering how much of the financial press eagerly solicits Summers’ take on every imaginable economics topic, it’s bizarre that no reporters have gotten his thoughts about his involvement in this crumbling company, and the asset class it promotes.
Is anyone going to ask the former treasury secretary why he worked for years with a possible fraudster? What did he know, and when did he know it? If Winklevoss’ assertions prove true, how was the former treasury secretary fooled by Silbert’s scheme, which seems to have been pretty obvious self-dealing?
How much due diligence does Summers conduct before sharing his name, status as former treasury secretary and time with a corporation as a formal “board advisor”? What value did Summers believe DCG provided the world? Does he still think crypto has emancipatory potential? If not, when did his mind change, and why?
By all appearances, Summers is dancing the same dance with crypto as he did in the 90’s and 00’s with traditional finance: preach the gospel of “innovation” while the music plays, then change into a sober-minded skeptic when the music stops.
Sure, everyday people lose their life savings in the bubble while he’s feeding it, but the important thing to Summers is that his reputation remains intact.
This intact reputation appears to also be of value to the journalists who quote him, regardless of whether figures as distinct as Brooksley Born, Robert Reich, Christie Romer and crypto skeptics have proven far more accurate.
It’s not as if Summers is difficult to reach, the man clearly loves to be quoted. The least the media can do before he next urges a higher unemployment rate while lounging on a tropical beach is to ask him some hard questions, as DCG appears to circle the financial and legal drain.
Better yet, financial reporters should take this as an opportunity to finally learn that just because a man has a fancy title and talks like a walking thesaurus neither means he’s right, nor means he isn’t playing you for a fool.
Jeff Hauser is the founder and director of the Revolving Door Project, which scrutinizes executive branch appointees to ensure they use their office to serve the broad public interest.
Max Moran is a research assistant at the Center for Economic and Policy Research (CEPR).
This article is from Common Dreams.
The views expressed in this article and may or may not reflect those of Consortium News.
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Larry Summers is the single most compelling argument for socialism that one could imagine. He is symbolic of the financial elite that have amassed enormous wealth while causing working men and women to live in a neo-Darwinian world where they compete for scraps from the table.
A more reprehensible human being would be hard to find. That the media still seeks out his words of wisdom and that he still has a media platform says everything one need know about the corporate control of mass media and its pernicious effect in our times.
The likeliest scenario: “Uhhh… We got our penal institutions TOO PACKED with Real Criminals… You know… Drug Lords… Parole Violators… The Next MLK!
‘Look, I don’t know what happened, the money was just lying there waiting to be picked up, so I have no idea how it ended in my offshore account, honest. ‘ I wonder if the SEC ‘s head will roll as well.
ECONOPATHS
That Larry Summers was involved shows how the econ system operates. While at Harvard, he was abrasive and dismissive, causing respected Afro-American studies professor Cornel West and professor of philosophy Kwame Appiah to go elsewhere. Summers followed that with a speech claiming few women in senior posts in science and engineering was due to genetic differences and not socialization, plus their reluctance to work long hours because of childcare.
During the 1999 Battle of Seattle anti-WTO actions, I met someone who’d been Summers’ asst. while at the World Bank who’d witnessed this: Summers suggested that a way for poor African countries to make money would be to import industrial waste from the economically powerful countries since these African nations were “vastly underpolluted.”
Yes, these points could be dismissed as ad hominem. But not when they are representative of how those who run this insane system really think. See Robert Kuttner’s 7/13/20 article in The American Prospect titled “Falling Upward: The Surprising Survival of Larry Summers.” Kuttner notes that Summers has powerful patrons and connections to the biggest financial elites; starting with his two famous economist uncles Kenneth Arrow and Paul Samuelson. He worships Milton Friedman,. He’s still advocating for financial deregulation and other policies proven disastrous–the like US and IMF pressure on managed economies which tanked even the strongest Asian economies and produced the severe econ exploitation in the ex-USSR countries.
But of course just because 90% of people lose under such policies isn’t a sufficient reason to change them. After all, the corporate elite and their minions benefit greatly. The same who now sponsor Dem/lib as well as Repub/cons parties worldwide. Obama listened to this guy and so does Biden. Cui bono?
Contrary to Kuttner, though, I don’t think it’s about “Falling Upward.” It’s not about incompetence–it’s about being rewarded since what Summers advocates is very, very beneficial to the econopaths and economies based on classism, racism, sexism. That Summers is connected with shady crypto is no surprise. The entire system is a massive Ponzi scheme. That it produces people like Shkreli, Holmes, and Bankman-Fried is not a bug, it’s a feature.
One look at Larry Summers and you will learn that we do NOT live in a meritocracy!
Larry Summers is a long-time personal friend of Robert Reich, according to Reich.
I cannot be unbiased: I loathe Summers (and Reich) and his ilk for their hypocrisy and pushing what Dr. Michael Hudson calls “Junk Economics”.
Reich has often criticized the outcomes of Friedmanite economic ideology and policies, however still clings to the textbook neoclassical (Junk Economics) theory and textbook. This is contradictory and hypocritical.
The Crash of 08 should have made Econ 101 textbooks (See Paul Samuelson et al.) and most of what is taught in university economics classes a laughingstock. Instead, nothing has changed. The Too Big To Fail (Above the Law) financial parasites did not go to jail, were rewarded for their crimes, and Junk Economics is still taught at the vast majority of colleges and universities in the US (and “the West”. Neoclassical Junk Economics adherents like Krugman, Summers, Reich etc. should also have been discredited after the 08 debacle, but they are held up as “experts”. The fact that they support the D or R faction is irrelevant, in my opinion all of these folks are right-wing economists who preach discredited economic ideology.
The Crypto Ponzi Racket is but a recent example of financial fraud. International organized crime and drug dealers love crypto, so I guess Summers involvement should be no surprise.
JonnyJames I would say I enjoy what Dr. Michael Hudson has to say. Never wavering and sticking to the point.
All or most pure common sense, as in there is no free lunch unless you are a Wall Street Kingpin.
Could it be that the bunch you list remain “experts” is because they play to the people who call the shots? Facilitators who front for organized crime. Which at this point includes some Federal organizations.
We don’t have the time or space here and I likely not the ability to explain how the 2008 fiasco was handled.
When these financial “institutions” have access to billions of $$$ in government protected offshore banks to prop up Wall Street as an institution you soon realize how corrupt the banking system is.
I do beg of you however one request, never address or refer to these maggots as group resembling a legitimate theory or explanation there of. They are no such thing and represent no such thing. These are people in positions to clandestinely produce obfuscation of the truth. People paid to engage in efforts to allow those with unchallenged access to pilfering the public fisc.
I my opinion these individuals are paid liars who cover for thieves, thereby thieves themselves, maybe “Expert Criminals” is a better description. People who have no allegiance to anyone but themselves.
Thanks CN
Very well stated. If someone is published in mainstream media, they are not going to be analyzing or criticizing U.S. economic policy. I, too, have no respect for Krugman et al; they are servants of the very people who seem bent on destroying anything decent.