Summers says does not see jobless topping 10 percent
WASHINGTON (Reuters) - One of President-elect Barack Obama's leading economic advisers said on Sunday he does not see unemployment topping 10 percent and wants financial rescue funds to be used to boost the flow of credit to the economy.
Incoming National Economic Council director Lawrence Summers said on CBS's "Face the Nation" that the $350 billion in financial bailout money spent so far had not produced all the results policymakers had hoped for.
"Anyone who looks at it has got to be disappointed when they look at what has happened to lending," Summers said.
"Got to think the results have been unsatisfactory. Got to think we need a more proactive approach that's got its focus on what is really the financial center of this problem, which is maintaining an adequate flow of credit," he said.
Congress approved the $700 billion Troubled Asset Relief Program in October in an effort to provide relief to financial institutions overwhelmed by the worst financial crisis since the Great Depression.
The funds aimed to inject credit into the economy at a time when banks and other institutions were holding onto cash as the value of many of their holdings, especially mortgages, plummeted.
On Thursday, the Senate voted to give Obama authority to spend the remaining half of the TARP funds amid renewed reports of banks in financial trouble.
Earlier this month, the Labor Department said the unemployment rate for December surged to 7.2 percent, its highest level in nearly 16 years and a jump from 6.8 percent in November.
The rise was driven by massive layoffs to all major sectors except government, education and health. In all of 2008, 2.6 million people lost their jobs, the largest slump in employment since a 2.75 million drop in 1945.
Summers said he expected further job losses but Obama's economic stimulus package should help limit the rise in unemployment. Asked if he thought the unemployment rate could top 10 percent, he said, "I don't think so."
"I think while we're going to see some substantial job losses, frankly what is important about the president's program here is that it is going to contain what would otherwise be just a vicious cycle, people spend less, therefore they earn less," said Summers, who served as treasury secretary under President Bill Clinton.
"We're going to contain this problem," Summers said.
(Reporting by Nancy Waitz, editing by David Alexander and David Wiessler)
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