In a hearing before the House Financial Services Committee, Treasury Secretary Tim Geithner asked lawmakers to grant the Treasury Department more power to seize failing financial firms.

Currently the government’s takeover power is limited to banks. The broader seizure power would also include large insurers, investment firms and hedge funds.

Expanding the Treasury Department’s authority would require Congress’ approval.

In his opening statement, Geithner said, “The United States government does not have the legal means today to manage the orderly restructuring of a large, complex, non-bank financial institution that poses a threat to the stability of our financial system.”

Geithner testified that financial crises such as the collapse of insurer AIG “contain a basic and tragic unfairness — that those who were prudent and responsible in their personal and professional judgments are harmed by the actions of those who were less careful and less prudent.”

Federal Reserve Chairman Ben S. Bernanke agreed with the need for expanded government takeover authority, telling committee members that had the government been imbued with the greater authority as far back as September, AIG could have been put into receivership and regulators would have been able to protect policyholders.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access