Summers: banks must accept gov’t regulation

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A top White House official is calling on financial institutions to accept new rules in order to help the economic system avoid future “devastating consequences for workers, consumers and taxpayers.”

In prepared remarks at a conference sponsored by The Economist magazine, White House chief economic adviser Lawrence Summers said that “financial institutions that have benefited from government support can, should, and must use this moment to think about what they can do for their country — by accepting the necessary regulation to protect the American people.”

Summers previously has called on Congress to require the largest banks to have bigger capital cushions to protect them if risky trading fails.

On Friday, he commended a House committee for moving to regulate derivatives a day earlier.

After a generation of “accidents” that had “devastating consequences for workers, consumers, and taxpayers” — including the recent financial crisis, the savings and loan problems of the 1990s and the bursting of the dot-com bubble earlier this decade — banks should accept new regulations, Summers said.

“Wall Street was no small part of the cause of the crisis and Wall Street needs to be part of the solution,” he said.

Copyright 2009 The Associated Press.