The Obama administration is expected to ask Congress for expanded powers that would let the Treasury secretary seize insurers, hedge funds, and other non-bank financial companies whose failure would imperil the economy, reports the Washington Post. While negotiations are ongoing, the plans to expand Treasury authority would represent a major shift from the current model of financial regulation, in which independent agencies have oversight powers.
Tim Geithner is expected to argue for the new powers during his testimony today before the House Financial Services Committee. Along with the ability to seize non-bank firms, he will ask for a range of tools to prevent failures: guaranteeing losses, buying up assets, or taking a partial ownership stake in troubled companies. Those powers would let the government break contracts, such as those that promised $165 million in bonuses to AIG employees.
(More Timothy Geithner stories.)
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