Summers: market interventions only temporary

By Glenn Somerville

WASHINGTON (Reuters) - Chief White House economic adviser Lawrence Summers on Friday vigorously defended the administration's aid for banks and carmakers as necessary, temporary measures rather than lasting market intrusions.

"Our objective is not to supplant or replace markets," Summers told the Council on Foreign Relations in New York. "Rather, our objective is to save them from their own excesses and improve our market-based system going forward."

His speech, monitored in Washington via audio feed, was clearly intended to take on criticisms that the Obama administration was taking on too much of an ownership role in industry rather than relying on free-market forces that have driven the American capitalist system.

"The actions we take are those of necessity, not choice," he insisted, adding that President Barack Obama had no desire to "manage banks, insurance companies or car manufacturers."

NO SOCIALISTS HERE

Summers said critics claim the administration was engaging in "backdoor socialism" and flatly denied it. "Where our focus has been as we have intervened when necessary is on the intervention being temporary, based on market principles and minimally intrusive," he said.

Summers offered a philosophical analysis of the financial system's woes, noting that history shows that every two or three years some dire situation arises like the Latin American debt crisis, the 1987 stock market crash or the Asian financial troubles of the late 1990s.