Home > economy > Bernanke, Geithner Call for Broader Government Powe

Bernanke, Geithner Call for Broader Government Powe

The U.S. government needs to be able to take over and wind down a broad range of economically important non-bank financial institutions, top economic officials told Congress Tuesday, though who will get that authority was left as an open question.

Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner told House lawmakers the government’s experience with American International Group Inc. highlights the need to deal with increasingly complex and systemically important institutions.

“If a federal agency had had such tools on Sept. 16, they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders, and impose haircuts on creditors and counterparties as appropriate,” Mr. Bernanke told the House Financial Services Committee.

Both he and Mr. Geithner said such a program could be modeled on the way the Federal Deposit Insurance Corp. takes over and deals with the assets and liabilities of U.S. banks. Mr. Bernanke even suggested the FDIC could be the logical agency to wield that authority. (Prepared Testimony: Bernanke | Geithner)

That marks a split with Mr. Geithner, who said such authority should rest with the Treasury. Mr. Geithner said the Obama administration wants the government to be able to act as conservator for large financial firms teetering on the brink of collapse, authority that would allow policy makers to renegotiate or cancel existing contracts, and sell or transfer a firm’s assets or liabilities.

Complete article

This article was originally posted on WSJ.com

  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: