The top US economic officials are trying to convince lawmakers to give them unprecedented powers to regulate — and even take over — financial goliaths whose collapse could imperil the entire economy. US President Barack Obama agreed and said he hoped “it doesn’t take too long to convince Congress.”
In a rare joint appearance before a House of Representatives committee, US Treasury Secretary Timothy Geithner and US Federal Reserve Chairman Ben Bernanke on Tuesday sought to channel widespread public outrage over huge bonuses to executives at bailed-out American Insurance Group, Inc (AIG) into support for a regulatory overhaul.
“AIG highlights broad failures of our financial system,” Geithner told the US House Financial Services Committee. “We must ensure that our country never faces this situation again.”
Dealings between Congress and Geithner have been tense at best.
But they were a little more relaxed in the afterglow of Monday’s nearly 500-point surge in the Dow Jones industrials, though the Dow dropped about 116 points on Tuesday. The rise came in large part in response to the administration’s unveiling of a public-private program to buy up to US$1 trillion in bad loans and toxic mortgage-related securities clogging bank balance sheets.
Geithner is expected to lay out more details on the administration’s plan tomorrow 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 a nationally televised news conference on Tuesday night, Obama put in a plug for the request Geithner made to Congress for extraordinary authority to take over failing companies like AIG, much as the Federal Deposit Insurance Corp (FDIC) now has for banks.
“It is precisely because of the lack of this authority” that AIG’s problems threatened to bring down the entire US economy, Obama said.
The government has given AIG over US$180 billion in bailout funds since it first intervened last Sept. 16. The US now owns nearly 80 percent of the giant insurer.
“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,” Bernanke said.
Both Geithner and Bernanke told the panel they did not become aware of the US$165 million in bonuses to AIG employees until March 10, just days before the payments were made. However, lower-level officials at both agencies were aware of the payments.
Bernanke said it was “highly inappropriate to pay substantial bonuses” in such a situation.
He said he had asked that the payments be stopped but was told that they were mandated by contracts.
“I then asked that suit be filed to prevent the payments,” he said.
But Bernanke said his legal staff counseled against this action “on the grounds that Connecticut law provides for substantial punitive damages if the suit would fail.”
At the House hearing, there were a few pointed exchanges.
Representative Paul Kanjorski, a Democrat, warned Geithner about any requests by the Obama administration for more taxpayer money to support the financial bailouts for companies like AIG.
“I assume that you recognize there’s not an awful lot of sympathy up here to necessarily provide additional funds — not going on the merits of whether the funds are necessary,” he said.
“We recognize it will be extraordinarily difficult,” Geithner said.
Geithner made it clear he believed the treasury secretary should be granted broad powers — after consultation with Federal Reserve officials — to take control of a major financial institution and run it.
Republican Senator Jim Bunning of Kentucky said on Tuesday that Geithner should “be booted out of office” and that Monday’s plan for handling toxic assets was “just another step in the direction of socializing our financial markets.”
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
SECURITY: The purpose for giving Hong Kong and Macau residents more lenient paths to permanent residency no longer applies due to China’s policies, a source said The government is considering removing an optional path to citizenship for residents from Hong Kong and Macau, and lengthening the terms for permanent residence eligibility, a source said yesterday. In a bid to prevent the Chinese Communist Party (CCP) from infiltrating Taiwan through immigration from Hong Kong and Macau, the government could amend immigration laws for residents of the territories who currently receive preferential treatment, an official familiar with the matter speaking on condition of anonymity said. The move was part of “national security-related legislative reform,” they added. Under the amendments, arrivals from the Chinese territories would have to reside in Taiwan for
CRITICAL MOVE: TSMC’s plan to invest another US$100 billion in US chipmaking would boost Taiwan’s competitive edge in the global market, the premier said The government would ensure that the most advanced chipmaking technology stays in Taiwan while assisting Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in investing overseas, the Presidential Office said yesterday. The statement follows a joint announcement by the world’s largest contract chipmaker and US President Donald Trump on Monday that TSMC would invest an additional US$100 billion over the next four years to expand its semiconductor manufacturing operations in the US, which would include construction of three new chip fabrication plants, two advanced packaging facilities, and a research and development center. The government knew about the deal in advance and would assist, Presidential
RSS