UPDATE 2-Summers: China holdings of U.S. debt fluctuate

* Some saw China sales of U.S. debt as protest

* Summers says must address long-term entitlement issues

* Urges action on financial regulatory reform
(Adds more quotes)

WASHINGTON, Feb 18 (BestGrowthStock) – Top White House adviser
Lawrence Summers on Thursday played down the significance of a
decline in China’s holdings of U.S. Treasuries.

Some saw China’s paring back of its portfolio as a possible
sign of protest against U.S. policies.

But asked on CNBC about the move, Lawrence Summers,
director of the White House National Economic Council, said the
reduction did not signal a concern and that U.S. government
debt retains its reputation as a secure investment.

“The truth is that these numbers fluctuate and that there’s
a wide range of holders of Treasury debt,” Summers said.

“That what’s been very clear from the market responses over
the last two years is that the United States is seen as a major
source of quality and a place people run to when they’re
uncertain,” he added.

In December, China was a net seller of all Treasuries to
the tune of more than $34 billion, bringing its total holdings
down to $755.4 billion from $789.6 billion in November. As a
result, China fell behind Japan to become the second-biggest
holder of U.S. Treasuries.

Summers said the government has an obligation to future
generations to ensure U.S. Treasuries retain their reputation
for quality and that is why it is crucial to rein in surging
debt levels.

President Barack Obama earlier named a bipartisan panel to
make recommendations for putting the country on a more
sustainable fiscal footing.

Summers said it was crucial to address the problem of
long-term U.S. entitlement costs.

Asked whether the administration would be open to
middle-class tax increases if the panel were to propose them,
Summers said that was “hypothetical” but said the 18-member
commission would not have preconditions for its
recommendations.

He urged the U.S. Congress to move quickly to pass a broad
bill to tighten financial regulations to prevent a repeat of
the 2008-2009 market meltdown.

“It can’t be right in our country that huge institutions
aren’t even regulated at all with regards to that systemic
risk,” Summers said. “It can’t be right that there’s no
effective oversight of consumer practices in the subprime and
other areas that led to this problem.”

“We’re certainly pushing the Senate to act as rapidly as it
can,” Summers said.

Concerning the state of the economy, Summers there were
still “severe economic problems” but it has improved.

“We are on the right path and what we need to do is
persevere. It’s part of the reason why jobs legislation is such
an important priority for the president this year,” he said.

Stock Basics

(Writing by Caren Bohan; Editing by Patricia Zengerle and
Eric Walsh)

UPDATE 2-Summers: China holdings of U.S. debt fluctuate