|
Treasury Secretary Timothy F. Geithner asked Congress Tuesday for new
regulatory authority for non-bank financial institutions such as
insurance giant American International Group in order to "eliminate gaps in supervision" and avoid potentially catastrophic threats to the nation's financial system.
Geithner said such authority would have allowed the government to bail
out AIG last year at a far lower cost to taxpayers, a position backed
by Federal Reserve Chairman Ben S. Bernanke. The government currently
has the authority to seize only banks.
Testifying before the House Financial Services Committee, Geithner
also said Treasury is working with the Justice Department to explore
legal avenues to recover AIG retention bonuses that have infuriated
taxpayers and raised hackles on Capitol Hill. He said his department
will impose on AIG a contractual commitment to pay the Treasury the
amount of the retention awards from company operations and will deduct
an amount equal to those payments from $30 billion in recently
committed capital assistance.
In testimony at the same hearing, Bernanke defended the decision
last year to bail out AIG but weighed in against the retention bonuses,
saying he had sought to halt them.
The three-hour hearing was marked by several contentious exchanges
between lawmakers and the witnesses. Both Republicans and Democrats
sharply questioned Geithner and Bernanke about the retention bonuses
and the overall bailout. Acknowledging the furor, Geithner said it
would be "extraordinarily difficult" for the Obama administration to
obtain any more bailout money from Congress.
|