Geithner Asks Congress for Broad Power to Seize Firms
By William Branigin and Binyamin Appelbaum
Washington Post Staff Writers
Tuesday, March 24, 2009
Treasury Secretary Timothy F. Geithner asked Congress today for new regulatory authority for non-bank financial institutions such as insurance giant American International Group in order to "eliminate gaps in supervision" and avoid potentially catastrophic threats to the nation's financial system.
Geithner said such authority would have allowed the government to bail out AIG last year at a far lower cost to taxpayers, a position backed by Federal Reserve Chairman Ben S. Bernanke. The government currently has the authority to seize only banks.
Testifying before the House Financial Services Committee, Geithner also said Treasury is working with the Justice Department to explore legal avenues to recover AIG retention bonuses that have infuriated taxpayers and raised hackles on Capitol Hill. He said his department will impose on AIG a contractual commitment to pay the Treasury the amount of the retention awards from company operations and will deduct an amount equal to those payments from $30 billion in recently committed capital assistance.
In testimony at the same hearing, Bernanke defended the decision last year to bail out AIG but weighed in against the retention bonuses, saying he had sought to halt them.
(More here.)
Washington Post Staff Writers
Tuesday, March 24, 2009
Treasury Secretary Timothy F. Geithner asked Congress today for new regulatory authority for non-bank financial institutions such as insurance giant American International Group in order to "eliminate gaps in supervision" and avoid potentially catastrophic threats to the nation's financial system.
Geithner said such authority would have allowed the government to bail out AIG last year at a far lower cost to taxpayers, a position backed by Federal Reserve Chairman Ben S. Bernanke. The government currently has the authority to seize only banks.
Testifying before the House Financial Services Committee, Geithner also said Treasury is working with the Justice Department to explore legal avenues to recover AIG retention bonuses that have infuriated taxpayers and raised hackles on Capitol Hill. He said his department will impose on AIG a contractual commitment to pay the Treasury the amount of the retention awards from company operations and will deduct an amount equal to those payments from $30 billion in recently committed capital assistance.
In testimony at the same hearing, Bernanke defended the decision last year to bail out AIG but weighed in against the retention bonuses, saying he had sought to halt them.
(More here.)
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