By John Byrne~Raw Story
President Barack Obama is considering asking Congress to give Treasury Secretary Timothy Geithner the power to seize non-bank financial companies — such as insurers or hedge funds — according to a report in Tuesday’s Washington Post.
The measure, Administration officials hope, will allow the government to forestall an economic domino effect, such as was caused by the failure of the investment house Lehman Brothers last year.
The Post’s story is based on an “administration document,” which was not printed.
“Giving the Treasury secretary authority over a broader range of companies 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 Post’s Binyamin Appelbaum and David Cho wrote. “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, according to the document.”
Meanwhile, a senior Democratic lawmaker told Reuters on Tuesday that he was willing to give Treasury Secretary Geithner more authority to oversee the unwinding of financial institutions that are not now federally regulated.
U.S. Rep. Paul Kanjorski, chairman of a House Financial Services subcommittee, said Geithner would be asking for additional authority to oversee organizations like giant insurer American International Group.
Kanjorski said he would work with the Obama administration to give the Treasury Department the additional authority to handle such institutions “if there is a systemic problem involved.
Legislation to allow Geithner expanded powers could go to Congress as soon as this week.
“The powers would parallel the government’s existing authority over banks, which are exercised by banking regulatory agencies in conjunction with the Federal Deposit Insurance Corp,” Appelbaum and Cho wrote. “Geithner has cited that structure as the model for the government’s plans.”