Geithner, Bernanke Want More Power

Treasury Secretary Timohty Geithner and Federal Reserve Chairman Ben Bernanke told Congress that the "U.S. government needs to be able to take over and wind down a broad range of economically important non-bank financial institutions," the Wall Street Journal reports." Geither gave an example, "As we have seen with AIG, distress at large, interconnected, non-depository financial institutions can pose systemic risks just as distress at banks can." Bernanke added, "If a federal agency had had such tools on Sept. 16, they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders, and impose haircuts on creditors and counterparties as appropriate." The Fed Chairman also said he knew about the AIG bonuses last fall, warned AIG about them, and wanted to sue, but was told suing could give the bank big punitive damages if the government lost the case. The pair's testimony did help stocks rally in the afternoon, but ultimately the markets lost a little of yesterday's ground.