Congressman Don Manzullo (R-IL) questions Treasury Secretary Timothy Geithner on the Administration's dramatic new plan to regulate financial services companies. Manzullo is concerned the plan goes too far and will give the government the power to seize private companies and set executive compensation limits, interfering with our free market system.
The "radical" comments are at the 3:30 mark.
From Wapo:
In testimony before the House Financial Services committee that just adjourned, Treasury Secretary Tim Geithner just had to defend his institutional takeover plan against charges of radicalism.
"Do you realize how radical your proposal is?" Rep. Donald Manzullo (R-Ill.) asked.
"It's not radical. . ." Geither began, before Manzullo interrupted him.
"You're talking about seizing private businesses and you don't consider that radical?" Manzullo replied, his voice rising.
Manzullo is trying to get Geithner to give details of the plan -- that's where Geithner got stung before -- but Geithner doesn't have them yet.
"If the plan were not radical," Manzullo said to Geithner, "you would have answers to some of my questions, such as, what size business would be subject to this?"
I think a couple of points are in order
ReplyDelete- We have a patchwork of regulators for financial services companies that clearly hasn't served us well. Almost all countries globally have some central/single regulatory. I mean AIG was regulated by teh state insurance dept of NY who didn't understand CDS.
- One of the problems we have is that we don't have insolvency regimes for dealing with large complicated financial instutions as was amply demonstrated with Lehman and to a large extent with AIG. The uncertainty on how we deal with this is I think a large part of the problem in the financial world. No one wants to get stuck holding debt issued by the next Lehamn, though have the govt guarantee it all is probably right either.
I've not read the plan but most of this I think is ho-hum, a centralized CDS exchange for example is supported widely.