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From the Frying Pan into the Fire 23 November, 2008

Posted by David Anderson in Uncategorized.
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The open for question for America’s near term future may be the new Treasury Secretary designate.  Timothy Geithner is one of the people who orchestrated the bailouts of Bear Stearns and AIG.  While at the IMF in the ’90’s he helped design and implement the Mexico and Asian bailouts.  He is someone willing to be very interventionist.  

According to the Wall Street Journal on line(Nov. 23, 2008),he is an advocate of broad powers and has often forced his will on firms.

Last month, when the Treasury and Fed decided to inject capital directly into the banking system — starting with the largest financial institutions — Mr. Geithner sat at the table with top government officials and bank executives. He detailed how much U.S. money each firm would receive, giving them no choice but to sign off to ensure that the capital-injection program wouldn’t be seen as going only to the weakest firms.

As Treasury Secretary, Mr. Geithner will play a key role in overhauling the patchwork of financial regulation after a year of turmoil that exposed oversight failures.

In recent months, he’s stressed the importance of building “shock absorbers” for the financial system so the failure of a major firm does not ripple through markets. His views indicate support for a proposal by other top officials to create a resolution system for failing financial firms, akin to the Federal Deposit Insurance Corp.’s procedures for depository institutions.

Mr. Geithner has offered few specifics, arguing that officials need broad authority while insisting that full decisions cannot be made until the crisis is over.

If you like Paulson, you will love Geithner.

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