The Mixed Economy in Crisis
3/27/2009
Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke believe the federal government needs far more regulatory power. Geithner has proposed a new agency with the power to seize and control non-bank financial institutions. This, he says, would have made the AIG bailout cheaper. So would have not having a bailout at all, but surely he would not take that option seriously.
Geithner is capitalizing on the public outrage over the AIG bonuses. The Washington Post quotes Geithner as saying, “The issue of excessive compensation extends beyond AIG and requires reform of the system of incentives and compensation in the financial sector.” The Post reports:
“In making his case for regulatory reform, Geithner told the committee, ‘AIG highlights broad failures of our financial system. Our regulatory system was not equipped to prevent the buildup of dangerous levels of risk.’ He said the federal government lacks the legal means at present ‘to manage the orderly restructuring of a large, complex non-bank financial institution that poses a threat to the stability of our financial system.’”
Harold
