The G-O team of Secretary of Treasury Timothy Geithner and President Barack Obama were the stars of today’s showtime.
Secretary Geithner once again faced questions before the House Financial Services Committee, this time about reform:
“To address this will require comprehensive reform,” Geithner said in prepared testimony for a House Financial Services Committee hearing. “Not modest repairs at the margin, but new rules of the game.”
The reforms the Obama administration is proposing through the words of Tim Geithner are among the most widespread and stringent since the Great Depression. In light of recent outrage against the “too big to fail” corporations and the near collapse of the the national financial system, the present administration is ready to take bold action to prevent another episode some time in the future. Perhaps, this is a one shot deal. We may never have so much support for regulatory reform as exists now.
“We have a moment of opportunity now” and “we need to act,” Geithner said. He also called for new standards for executive compensation practices “across all financial firms.”
The administration’s regulatory framework would make it mandatory for large hedge funds, private-equity firms and venture-capital funds to register with the Securities and Exchange Commission, subjecting them to new disclosure requirements and inspections by the agency’s staff. The SEC would be able to refer those firms to the systemic regulator, which could order them to raise capital or curtail borrowing.
The strategy also would require derivatives to be traded through central clearinghouses. And it would add new oversight for money-market mutual funds to reduce the risk of a run on those funds after a shock like last year’s failure of Lehman Brothers Holdings Inc.
Additionally, Geithner proposed that banks set aside extra reserves when times are good to pad them for when times are bad.
For those who have said that Geithner has no plan, they need to rethink their judgment. During the past week the Obama administration, throught both President Obama and Sec. Geithner have laid out a pretty clear cut plan, although both will admit that there will be a need for tweaking as time goes on.
While Geithner was being grilled on the Hill, President Obama was taking questions from citizens across the nation in the first online town hall meeting from the White House. Needless to say, there are some… mostly Republicans, I suppose… who feel that President Obama is “too available” or playing to the media too much.
For the rest of us, even though the questions were very similiar to questions we have heard before and the answers were a repeat of the Obama position on policy, we were excited about our first national town hall meeting. Our President promised that he would be available to the public, that he would keep the office open to the people. For those who believe he is becoming “too familiar” I would only respond that they wish they had a following that had as much trust and faith in them.
Regardless of the Obama motivation, we are beginning to feel as if someone is willing to listen.
Kudos to Obama and Geithner for a job well done today.