* Summers says unemployment "unacceptable"
* But sense of free fall gone
(adds quotes, background)
PALO ALTO, Calif., March 12 (Reuters) - The United Statesshould rethink domestic and global financial regulation,Lawrence Summers, director of the the White House"s NationalEconomic Council, said on Friday, outlining six "imperatives."
"There is every reason to believe that pure marketsolutions are not viable," Summers told a Stanford Institutefor Economic Policy Research conference.
The speech comes against the backdrop of a debate over howmuch regulation and in what form would best cut risks ofanother Wall Street crisis or massive failure of the financialsystem.
Summers said there were signs of improvement from a yearago but that much work remained to right the economy.
"Unemployment is at unacceptable levels and it will remainat unacceptable levels for a substantial interval," he said.But, he said, the previous sense of "free fall" was gone.
Summers gave six imperatives for policy in financialregulation:
* Comprehensive regulation of all systemically importantinstitutions
* Procedures for managing failures of even the biggestinstitutions
* Raise and make comprehensive higher capitalrequirements, and restrictions on leverage, and requirementsfor liquidity.
* Americans should be compensated for giving assistance toinstitutions
* Over-the-counter derivatives and swap transactions,sophisticated financial instruments associated with the WallStreet crisis, should require use of a clearinghouse orexchange where possible to increase transparency and stability
* Institutions that benefit from the government"s safetynet should face restrictions on activities.
(Peter Henderson, San Francisco Newsroom +1 415 677 2541)
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