Geithner: Taxpayer Cannot Bear Burden of Future Bailouts
Protecting American taxpayers from bearing the burden of future financial crisis (see: AIG, Fannie/Freddie, Detroit bailouts) is the goal of regulatory reform, Treasury Secretary Tim Geithner said in testimony before the House Financial Services Committee underway right now.
Financial regulatory reform must meet three goals, Geithner said:
-- It must provide substantial new protections for consumers and investors. (This is the administration's proposed consumer financial protection agency, a new government entity that would be designed to help consumers understand the fine print when investing or getting a credit card.)
-- It must create a more stable, safer financial system, one less prone to crisis. (This has to do with creating a super-regulator, maybe the Fed, that would work to deflate bubbles before they happen.)
-- It must safeguard American taxpayers from having to bear the costs of battling future crises.
"No private economic system can function effectively if firms are insulated from the full consequences of their bad decisions," Geithner said. "History suggests that periods of financial stress will happen again in the future. Therefore, it is critical to limit the systemic footprint of individual firms and to reduce the likelihood of, and the potential damage to the financial system from, the failure of our major financial firms."
The administration will be pushing these goals at the G-20 summit in Pittsburgh this week.
To read Geithner's full testimony, click here.
-- Frank Ahrens
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September 23, 2009; 10:51 AM ET
Categories: The Ticker | Tags: Tim Geithner, financial system, regulatory reform
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