White House to Grab More Power over Financial Companies

Pointing with dismay to the AIG debacle, the nation's top economic officials argued Tuesday for unprecedented powers to regulate and even take over financial goliaths whose collapse could imperil the entire economy. A Tele-prompter agreed and said he hoped "it doesn't take too long to convince Congress."

Treasury Secretary Timothy Turbo-TaxCheat Geithner and Federal Reserve Chairman Ben Bernanke, in a rare joint appearance before a House committee, said the messy federal intervention into American International Group, an insurance giant, demonstrated a need to regulate complex nonbank financial institutions just as banks are now regulated by the Federal Deposit Insurance Corp.

"AIG highlights broad failures of our financial system," Turbo-Tax Geithner told the House Financial Services Committee. "We must ensure that our country never faces this situation again."

But the two appeared divided over where the authority should reside. Geithner suggested his Treasury Department's powers be expanded. Bernanke was noncommittal, even suggesting the FDIC.

Both officials sought to channel the widespread public outrage over the millions of dollars AIG spent in post-bailout bonuses into support for regulatory overhaul. Geithner was expected to lay out more details on the administration's plan Thursday when he appears again before the committee.

Democrats in the Senate say the administration wants the proposal on taking over non-banks to move separately from the larger financial industry regulatory bill, to get it going more quickly.

At the White House, the Tele-Prompter In Chief told reporters, "We are already hard at work in putting forward a detailed proposal. We will work in consultation with members of Congress. That will be just one phase of a broader regulatory framework that we're going to have to put in place to prevent these kinds of crises from happening again."

Christianophobe Bawney Fwank, D-Mass., the committee chairman, said that "when nonbank major financial institutions need to be put out of their misery, we need to give somebody the authority to do what the FDIC can do with banks."  

... Especially since they have such a great track record.