Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke argued Tuesday for unprecedented powers to regulate and even take over financial goliaths whose collapse could imperil the entire economy. Obama, of course, agreed and said he hoped “it doesn’t take too long to convince Congress.”
Geithner Bernanke, said the messy federal intervention into American International Group demonstrated a need to regulate complex non-bank financial institutions.
Rep. Barney Frank, D-Mass., the committee chairman, said that “when non-bank major financial institutions need to be put out of their misery, we need to give somebody the authority to do what the FDIC can do with banks.”
Geithner made it clear he believes the treasury secretary should be granted broad powers – after consultation with Federal Reserve officials – to take control of a major financial institution and run it.
Dealings between Congress and Geithner have been tense.
Rep. Paul Kanjorski, D-Pa., warned Geithner about any requests by the Obama administration for more taxpayer money to support financial bailouts.
“I assume that you recognize there’s not an awful lot of sympathy up here to necessarily provide additional funds – not going on the merits of whether the funds are necessary,” he said.
Rep. Brad Sherman, D-Calif., told Geithner: “What I fear here is that we are doing a kabuki theater in three acts.
“The first act: Washington tells the American people, ‘We understand your anger at Wall Street.’ In the second act, we nitpick to death any proposal that actually adversely affects Wall Street. And then, in the third act, we bestow another trillion dollars on Wall Street under extremely favorable terms.”
