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President Barack Obama's top economic adviser says the crisis in the financial sector has led to an "excess of fear" that must be broken to reverse the economic downturn.
Lawrence Summers, the president's director of the National Economic Council, told a think tank gathering Friday that "fear begets fear" and that "is the paradox at the heart of the financial crisis."
He said an abundance of greed and an absence of fear precipitated the excesses that led to the meltdown that froze credit.
Summers said it was "modestly encouraging" that consumer spending appears to have stabilized after collapsing during the holiday season.
He spoke at the Brookings Institution.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
WASHINGTON (AP) — President Barack Obama is embracing a mantle of confidence-builder in chief. Whether he is meeting with his own economic advisers or worried business leaders, his message is meant to be calm and reassuring — even in the wake of more bad economic news.
Obama will have another opportunity to assert his optimism after he meets Friday with Paul Volcker, the former Federal Reserve chairman who now guides the president's economic recovery advisory board. Volcker was preparing to brief Obama and his economic team on how the $787 billion stimulus package is working.