The Boston Globe has an excellent piece on Larry Summers’ mismanagement of Harvard’s finances today. As president from 2001 to 2006, Summers overstepped his presidential duties and pushed most of the university‘s cash into the market, against the frantic warnings of his investment chiefs. These moves lost Harvard close to $2 billion.
The article opens with a debate, Summers’ preferred mode of personal interaction:
It happened at least once a year, every year. In a roomful of a dozen Harvard University financial officials, Jack Meyer, the hugely successful head of Harvard’s endowment, and Lawrence Summers, then the school’s president, would face off in a heated debate. The topic: cash and how the university was managing – or mismanaging – its basic operating funds.
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 essentially makes Wall Street look both smart and humble. An incredible feat!
The entire article is well worth a read.
Summers works two floors above the Oval Office right now. You have to wonder: what kinds of debates is he (brilliantly) winning right now?