Geithner 3.0: What a difference a day makes

This is the most sensible thing I’ve heard from him yet — a proposal for FDIC-type powers for the government to temporarily take over too-big-but-failing-anyway financial institutions like AIG, clean house, and sell off their remaining assets.   I once thought the FDIC already had those powers, but apparently that’s so only for regular commercial banks, not bank holding companies or other financial Goliaths.   (FDIC Chairperson Sheila Bair explains it here.)

The new proposal doesn’t necessarily conflict with anything in yesterday’s plan to subsidize the worst financial institutions by overpaying for their worst assets, but it does suggest that the Obama Administration really does have plans to regulate them and is not kidding itself (Pollyannish recent rhetoric  to the contrary) that all of them are fundamentally sound.

From the AP’s article:

‘Treasury Secretary Timothy Geithner called on Congress Tuesday to grant him new powers to regulate huge financial companies like insurance giant AIG, whose failure would pose a grave danger to the U.S. financial system and the broader economy.

‘Specifically, Geithner wants powers similar to those of the Federal Deposit Insurance Corporation, which has authority to seize control of banks, take over their bad assets and sell good ones to competitors.

‘ “AIG highlights broad failures of our financial system,” Geithner told the House Financial Services Committee. “We must ensure that our country never faces this situation again.” ‘

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4 Responses to “Geithner 3.0: What a difference a day makes”

  1. democommie Says:

    Beatings will continue until morale improves!

    Can I haz a few minutes with anyothem CEOafs? I will teach them all about what a wicked world it really is.

  2. econobox Says:

    Best. Explanation. Ever. EVER.

    http://www.markfiore.com/

    Check out “Hopping Mad” and “Leverage Me Tender.”

    • Ranjit Says:

      Thanks. I’m a big fan of Fiore. And how are things in the Elm City? Can’t believe how many of my former ivory-tower professors there (Buiter, Shiller, Roubini) are now among our best and most prolific public intellectuals. It was kind of a dirty word when I went there.

  3. Ranjit Says:

    econobox- ‘Hopping Mad” and “Leverage Me Tender” were awesome. But “Zombie Bank” was my favorite. Can’t wait to show ’em in class.

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