Tim Geithner just called for sweeping regulatory powers over non-bank institutions “Geithner Seeks New Powers over Financial Companies”.
I mentioned previously that Congress (both Democrats and Republicans) slowly overturned all Depression Era laws that were designed in the 1930s to help keep a Great Depression from ever happening again. We are now paying the price for Congress’s folly.
I described before how the FDIC has a large group of financial experts that descend, in the middle of the night, on a failing bank and just take over. The bank operates as usual just under the FDIC.
Geithner apparently wants the same type of group to be able to descend on, let’s say, an AIG in the middle of the night and just take over.
Once they take over and see what is going on, they would have broad discretionary powers to sell off good assets and discount bad assets. I like the idea and have recently suggested it myself but guaranteeing people’s savings is one thing, what about life insurance, etc.
Congress has also allowed banks to spread into many other areas it was not allowed to in the past. On the other hand, financial institutions were allowed to become like banks which was also something they could not do in the past. I feel that this overlapping has created financial monsters with a lot of room to goof around in so I would want things BACK to the old days where banks were banks and investment houses were just that.
I want to see how the Republicans react to this latest volley from Obama. They want NO regulations but even they can see what the hell happens when you let the financial boys, and I mean boys, play without rules.
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