"And the flaw in that argument," Clinton added, "was that first of all sometimes people with a lot of money make stupid decisions and make it without transparency."
Through the first half of this decade, Meyer repeatedly warned Summers and other Harvard officials that the school was being too aggressive with billions of dollars in cash, according to people present for the discussions, investing almost all of it with the endowment's risky mix of stocks, bonds, hedge funds, and private equity. Meyer's successor, Mohamed El-Erian, would later sound the same warnings to Summers, and to Harvard financial staff and board members.
Summers ultimately cost Harvard $1.8 billion (out of a $6-billion-dollar endowment) through bad investments in, among other things, derivatives.
Summers, amazingly, wanted to invest 100% of the university's cash in the endowment, and had to be talked down to investing a mere 80%. No wonder Meyer and El-Erian tried to talk him out of it: the Harvard endowment was never designed as a place to invest sums of cash that might be needed immediately. Instead, it's designed to invest for the very long term, taking advantage of the higher returns on illiquid investments.
Summers was playing a high-risk carry-trade game with Harvard's cash:
Did Summers display other ethical problems? Yes.
So why did Summers lose his job at Harvard? It was because of his protecting a buddy, a fellow economist at Harvard named Andrei Shleifer.
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Shleifer got in trouble, and the U.S government sued and won against Harvard and Shleifer.
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Summers was good friends with this criminal, and used his position to protect him.
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Summers said conflict-of-interest "issues," in his Washington experience, were "left to the lawyers." He said he was sensitive to "ethics rules," but testified that "in Washington I wasn't ever smart enough to predict them ... things that seemed very ethical to me were thought of as problematic and things that seemed quite problematic to me were thought of as perfectly fine...."
Are ethical issues still a problem for Summers? As a matter of fact, yes.
The Lending Club's rates, says the Times, are apparently "higher than what was available at a credit union or other lenders." And that's not the only problem with the outfit.
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