The Obama Administration, mostly through Tim Geithner, has compared the proposed process to the work of the Federal Deposit Insurance Corporation. This favored institution protects depositors from bank failures. Regulators can take control of a troubled depository, place it under the authority of the FDIC, and then, quickly, and competently, restructure the reserve.
Perhaps, that is the most significant difference. With consideration of the current economic crisis, and crucial assessments, the Secretary made prior to this plea for greater rule, Timothy Geithner showed no evidence of being swift or skilled in his ability to seize the moment or reign in American Insurance Group's excesses.
As the former president of the New York Federal Reserve, Mister Geithner is the one Obama Administration official who is associated with the Bush-era bailouts. Once AIG was under Federal control, public servants say, compensation arrangements were rarely, if ever, discussed. In December, long before Tim Geithner received his own abundant reward, an initial $55 million in bonuses was delivered to the Insurance Group executives.
At the time, the glorious Geithner did not decry the greed. Indeed, even on this date late in March 2009, as he answered questions before the House Financial Services Committee, Secretary Geithner stated, "It's a difficult balance." He then further explained his belief; the government should not dictate detailed executive compensation limits to bankers. Timothy Geithner empathized with those who had been given retention bonuses. Indeed, while he did not give voice to the thought, the Secretary understood, he too was a very recent beneficiary of such graciousness.
Perhaps, opponents of greater government oversight appreciated the more individualist posture Treasury Secretary Geithner presented. However, a few felt a vital veracity must be pondered. An individual Presidential appointee [Geithner], and an agency [FDIC] with ample autonomy, are not one and the same.
Intentionally, the Federal Deposit Insurance Corporation, unlike the Treasury Department, was designed to be separate from the political process. The bureau acts in accordance to law. Should Congress consent to the Geithner request, a person who is profoundly affiliated with a partial, political body, would have the authority to take possession of a business that displeases the White House. Granted, supporters assure those who challenge the proposal, only corporations in crisis would be seized. Nevertheless, dissenters declare, corporate collusion with government insiders remains a concern. A poorly regulated financial institution potentially would corrupt the government [further?].
Policy-wonks state, the power to take over banks or other alternative financial entities need be part of a broader regulatory structure. Limits are set on the risks that economic establishments can take. Therefore, the need for seizures is, and must be, more fully linked to violations. The Obama Administration has expressed a desire to increase regulations on firms that might be eligible for seizure under the proposed law. However, specifics have yet to be furnished.
For now, the focus remains solely on the Treasury Secretary. Tim Geithner seeks greater power than was given to him in the form of a gift, his title.
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