October 30, 2008 In Boston, Summers discusses economic bailout plan Play video

(NECN: Peter Howe, Boston, Mass.) - We are hearing today from former Treasury Secretary Lawrence Summers about the government's financial bailout plan. He spoke this morning at the Greater Boston Chamber of Commerce.

Summers was deputy Treasury secretary and later Treasury secretary from 1995 to 2000 -- a time that now looks like an economic Golden Era. As you might expect of a former Bill Clinton aide and advisor to Barack Obama, he's not a huge fan of the Bush administration's response to this crisis, but he's hopeful that by maybe April the economy will just be in a recession, not a crisis.

Lawrence Summers: "Frankly, policy has been a day late and a dollar short for 15 months now."

Click here to watch Summers' full speech.

It was Greater Boston business leaders' first chance to hear from former treasury secretary Larry Summers about the current economic crisis, Thursday morning at the Greater Boston Chamber of Commerce.

"Markets always overreact, therefore policy must overreact. We need to overreact on the side of stimulus, overreact on the side of capital infusion if we are to restore confidence going forward, and the next president will have a historic opportunity to do that."

Later we asked Summers to grade his successor Henry Paulson on the $700 billion bailout plan: What's working and what

"I think we'll have to wait and see. I think the decision to allocate a significant portion of the rescue plan to the recapitalization of financial institutions rather than the purchase of debt securities was a very useful step,'' Summers said. "But we'll have to wait and watch and adjust over time."

An uprising by Harvard's faculty ran Larry Summers out as president after just five years, in 2006. But he'll always be able to say: There was never an international finance meltdown when I was running the Treasury Department (as deputy secretary and later secretary from 1995-2000).

And Summers is optimistic -- guardedly optimistic -- the worst of the meltdown will soon be behind us: "I think it is plausible to hope that within 6 months a sense of much greater normality could return to financial markets and that you didn't have the kind of pulsing anxiety about what's going happen to the markets in the last 20 minutes, and is there going to be a breakdown? Is there going to be a credit failure?"