Geithner Asks Congress for Broad Power to Seize Firms

[stephanie]

By Binyamin Appelbaum, David Cho and Debbi Wilgoren
Washington Post Staff Writers
Tuesday, March 24, 2009; 10:42 AM

Treasury Secretary Timothy F. Geithner today told Congress the administration will seek unprecedented power to seize non-bank financial companies whose collapse could jeopardize the economy, a move Geithner said would have allowed the government to bail out insurance giant American International Group at a far lower cost to taxpayers.

This Story
Geithner to Ask Congress for Broad Power to Seize Firms
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The government at present has the authority to seize only banks.

Allowing the Treasury Department to take over a broader range of companies, such as large insurers, investment firms and hedge funds, would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process. The Treasury secretary, a member of the president's Cabinet, would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators.


"Our system permitted a scale of risk taking that has caused grave damage to the fortunes of all Americans," Geithner said in testimony before the House Financial Services Committee. " . . . We must create a new resolution authority so that the federal government has the tools it needs to unwind an institution of the size and complexity of AIG."

read the rest.
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/24/AR2009032400847.html?hpid=topnews

[hjmick]

Sounds like someone has been consulting with Hugo Chavez.

This is some scary shit.

[bullypulpit]

The only thing Geithner needs is to have the steering wheel taken out of his hands. His "Cash for Trash" scheme is the same one offered, then abandoned, by the Bush administration, and he has always been a part of the same group who think that the ones who got us into this mess should be the ones to get us out of it. The language and lore of Freidmanesque deregulatory schemes is deeply embedded in his DNA and serve no useful purpose in extricating the country from its current economic mess.

But there are firms which, if insolvent, are not deserving of any further tax-payer funded bailouts. These firms need to have their books audited by government regulators and either nationalized to clean up their balance sheets and sold or shut down altogether.

[Yurt]

now i know why obama was laughing so much in his 60 minutes interview...

[Insein]

The only thing Geithner needs is to have the steering wheel taken out of his hands. His "Cash for Trash" scheme is the same one offered, then abandoned, by the Bush administration, and he has always been a part of the same group who think that the ones who got us into this mess should be the ones to get us out of it. The language and lore of Freidmanesque deregulatory schemes is deeply embedded in his DNA and serve no useful purpose in extricating the country from its current economic mess.

But there are firms which, if insolvent, are not deserving of any further tax-payer funded bailouts. These firms need to have their books audited by government regulators and either nationalized to clean up their balance sheets and sold or shut down altogether.

Or we could go the old capitalistic route and let them fail. Instead of giving bailouts we should be letting other companies take their place. These bailouts were the foot in the door to start nationalization. Something that nobody wants but seems like we are headed for.

[Little-Acorn]

Did anyone point out to Mr. Geithner, that such a seizure by the Fed govt, would be completely unconstitutional?

Maybe he should content himself with regulating the pay of executives in corporations whether they did or didn't receive bailout money.

At least that would only affect a few people, and would be only a little unconstitutional.

[bullypulpit]

Or we could go the old capitalistic route and let them fail. Instead of giving bailouts we should be letting other companies take their place. These bailouts were the foot in the door to start nationalization. Something that nobody wants but seems like we are headed for.

On the model of the FDIC, such powers would be useful in reorganizing financial institutions or winding down their operations and dispose of assets so as to minimize the damage to the economy. If you wanna call it nationalization, that's your prerogative, but it would still be wrong. But if nationalization is the way to go, the administration shouldn't be afraid to take it.

[Jagger]

This is some scary shit.
I ain't scared of no financial system collapse.

[Jagger]

Sounds like someone has been consulting with Hugo Chavez. At least Chavez wasn't stupid enough to repeal Glass-Steagall.

[Mr. P]

At least Chavez wasn't stupid enough to repeal Glass-Steagall.

When did Chavez have that opportunity?

[Jagger]

so as to minimize the damage to the economy. Dude, you know darn well that Right Wing Republicans value their discredited economic ideology over the general welfare of the nation

[Mr. P]

At least Chavez wasn't stupid enough to repeal Glass-Steagall.


When did Chavez have that opportunity?

What no answer?

[Jagger]

Or we could go the old capitalistic route and let them fail. Instead of giving bailouts we should be letting other companies take their place. These bailouts were the foot in the door to start nationalization. Something that nobody wants but seems like we are headed for.

Conservatives want the banks to fail so they can install a fascist government and make Christianity the National Religion.

[Mr. P]

Conservatives want the banks to fail so they can install a fascist government and make Christianity the National Religion.

Have a credible source on that?

[5stringJeff]

Conservatives want the banks to fail so they can install a fascist government and make Christianity the National Religion.

http://img45.imageshack.us/img45/7919/roflcopter9gr.png

[stephanie]

Conservatives want the banks to fail so they can install a fascist government and make Christianity the National Religion.

shouldn't this post be moved into conspiracy theories? good gawd that was :lame2: ..

[PostmodernProphet]

On the model of the FDIC, such powers would be useful in reorganizing financial institutions or winding down their operations and dispose of assets so as to minimize the damage to the economy. If you wanna call it nationalization, that's your prerogative, but it would still be wrong. But if nationalization is the way to go, the administration shouldn't be afraid to take it.
I am really puzzled how you could call it anything else.....the government reorganizes a business, alters it's operations, disposes of assets?......

[sgtdmski]

The only thing Geithner needs is to have the steering wheel taken out of his hands. His "Cash for Trash" scheme is the same one offered, then abandoned, by the Bush administration, and he has always been a part of the same group who think that the ones who got us into this mess should be the ones to get us out of it. The language and lore of Freidmanesque deregulatory schemes is deeply embedded in his DNA and serve no useful purpose in extricating the country from its current economic mess.

But there are firms which, if insolvent, are not deserving of any further tax-payer funded bailouts. These firms need to have their books audited by government regulators and either nationalized to clean up their balance sheets and sold or shut down altogether.

Sorry to burst you bubble, but if we had followed the Freidmanesque ideals, we would have never bailed the companies out in the first place, instead we would have allowed the market to take care of itself. Companies that were in a better position would have been able to buy up the portions of failing companies that represented profits, in turn making their companies stronger.

The whole problem revolves around the misguided notion dealing with home loans. It is that simple. Government encouraged companies to give loans to those who the company would not have normally given, all backed by the threat of fines and penalties from the US government.

To further manipulate the system the government gave monies to organizations like La Raza and ACORN to help people who normally would not qualify to take advantage of loans that would enable them to buy homes with little or no money as downpayment.

Prior to this push by government most lending institutions required people to have the 20% down payment monies, and monies to cover closing costs. However, government backed plans eliminated these, and lending insitutions had no choice but to take advantage of the system. Especially considering the goal of any company is to make money for its stock holders a company had to compete with others who were taking advantage, thus the whole system was set up for failure.

Government got exactly what it wanted, by sticking its nose in the market in the first place. Perhaps if we had allowed the Freidmanesque ideals to let the market be, then we would not have experienced the housing and banking collapse. Nor would we have had other financial institutions that were not banks in the habit of making loans in the first place.

dmk

[sgtdmski]

I again wonder why in the world would we want the Government to take over any business. Barney Frank who is busy running around calling Justice Scalia a homophobe is in charge of the House Banking Committee. The same Barney Franks that just back in July was telling us that Fanny and Freddie were financially sound. Let's see some 3 months later both required some 350 billion dollars from the government to stay a float. Well if that is financially sound, what do you think good old Barney would do to a company that is already running in the right direction, more than likely take it in the wrong one.

The same government that runs Social Security that returns a 1.3% rate of interest on the money people pay into it. Hell, you could triple you retirement money by merely placing it in a savings account at any bank.

The same government that has Medicare to help the poor old people, but still requires them to have outside insurance. The same Medicare that dictates what tests and what procedures a doctor may perform on a patient.

The same government that allows its Medicaid users to abuse the system and run up unnecessary costs. With no co-pay, its users have no incentive not to go to the Emergency Room to avoid having to wait a day to go to the doctor's office, and therefore incur bills that cost the system 10 times what a doctor's office visit would cost.

The same government that runs the US Postal service, who does a great job of delivering mail, but cannot compete with a company that can get it there over night, thus the rise of Fed Ex.

Yeah, turn them all over to the government, then we can all suffer and enjoy the misery together.

dmk