Geithner: More Work To Be Done To Build Strong Financial System
(RTTNews) - Treasury Secretary Timothy Geithner said Thursday that the U.S. has a long way to go to ensure a full economic recovery and guarantee that last year's financial collapse will not happen again in the future.
Speaking before the congressional Joint Economic Committee, Geithner said that the regulatory regime that is currently in place is the same regime that failed to prevent the financial crisis, filled with too many agencies and too many regulatory gaps.
"This is a mess, and we have to clean it up," he said.
Geithner said that the current regulatory regime allowed an excessive build up of risk and did not have adequate tools to preserve financial stability and withstand the failure of large financial institutions.
The secretary went on to stress that reform should create "a safer, more stable financial system that can deliver the benefits of market-driven financial innovation even as it guards against the dangers of market-driven excess."
To achieve that goal, Geithner first said that firms must not be able to escape regulation by switching their legal designation.
"Firms engaged in the same kind of business, performing the same essential economic functions, must be subject to fundamentally the same regulation and supervision," he said.
As he has on other occasions, Geithner advocated for the creation of a single entity to regulate large, interconnected firms in order to better protect consumers from regulatory lending practices.
"This is no place for regulation by council or by committee," he said. "The stakes are simply too high to allow diffuse authorities and responsibilities to weaken accountability."
The secretary also advocated for higher capital and liquidity requirements, so that financial institutions can internalize the costs of the risks they impose on the financial system.
Geithner also called for the elimination of the notion of too-big-to-fail, advocating for giving the government the authority to break up large financial institutions in danger of collapsing before they can do any damage to the economy and taxpayers.
"The authority would facilitate the orderly demise of a failing firm, not ensure its survival," he said.
Geithner did express some optimism early in his speech, applauding the recent efforts of lawmakers, particularly Christopher Dodd, D-Conn., and Barney Frank, D-Mass., to create reform legislation,
He added that further GDP growth is expected in the fourth quarter, although he warned that the recovery could not be sustained without reform.
For comments and feedback: contact editorial@rttnews.com
Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved
Speaking before the congressional Joint Economic Committee, Geithner said that the regulatory regime that is currently in place is the same regime that failed to prevent the financial crisis, filled with too many agencies and too many regulatory gaps.
"This is a mess, and we have to clean it up," he said.
Geithner said that the current regulatory regime allowed an excessive build up of risk and did not have adequate tools to preserve financial stability and withstand the failure of large financial institutions.
The secretary went on to stress that reform should create "a safer, more stable financial system that can deliver the benefits of market-driven financial innovation even as it guards against the dangers of market-driven excess."
To achieve that goal, Geithner first said that firms must not be able to escape regulation by switching their legal designation.
"Firms engaged in the same kind of business, performing the same essential economic functions, must be subject to fundamentally the same regulation and supervision," he said.
As he has on other occasions, Geithner advocated for the creation of a single entity to regulate large, interconnected firms in order to better protect consumers from regulatory lending practices.
"This is no place for regulation by council or by committee," he said. "The stakes are simply too high to allow diffuse authorities and responsibilities to weaken accountability."
The secretary also advocated for higher capital and liquidity requirements, so that financial institutions can internalize the costs of the risks they impose on the financial system.
Geithner also called for the elimination of the notion of too-big-to-fail, advocating for giving the government the authority to break up large financial institutions in danger of collapsing before they can do any damage to the economy and taxpayers.
"The authority would facilitate the orderly demise of a failing firm, not ensure its survival," he said.
Geithner did express some optimism early in his speech, applauding the recent efforts of lawmakers, particularly Christopher Dodd, D-Conn., and Barney Frank, D-Mass., to create reform legislation,
He added that further GDP growth is expected in the fourth quarter, although he warned that the recovery could not be sustained without reform.
For comments and feedback: contact editorial@rttnews.com
Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved
Most Popular News
- Apple Provides Guidance Above Estimates
- Citigroup To Report Q4 Results: Earnings Preview
- Ahead Of Intel's Q4 Earnings
- Intel Guides Above Revenue Estimates
- Obama bank proposal slams markets
- More News >>
UPCOMING EVENTS
Learn new strategies, how to trade in this market, and the stocks you should be focusing on each day. Join us for our free 20 minute tele-seminars during the week.
Thursday February 11 04:30 PM
Thursday February 11 12:30 PM
Wednesday February 10 01:00 PM
* Attendance is strictly limited and are filled on a first-come, first-served basis.
