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Gov't to unveil rules for financial firms
House Financial Services Committee Chairman Barney Frank at a hearing on Capitol Hill in Washington, D.C. (Photo by Mark Wilson/Getty Images)
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TEXT OF STORY
Bill Radke: Reports out this morning say the government is about to propose some new rules for dealing with huge and shaky financial institutions. A House committee could introduce a measure today. It would give the government more power to take apart these financial giants that get into trouble. Here's Marketplace's Ashley Milne-Tyte.
Ashley Milne-Tyte: When a regular bank gets into trouble, the government has the authority to step in and reorganize the bank. But so far it lacks that authority when it comes to big financial institutions, like Citigroup or AIG or the failed Lehman Brothers.
The new legislation would let the government reorganize a colossus. And as University of Maryland business professor Peter Morici says, avoid the lengthy process of bankruptcy court.
Peter Morici:This permits the federal government to go in and act surgically, get it over with quickly, and keep the financial system going.
He says it's a good way to stop the financial pain from spreading like it did last year after Lehman Brothers failed.
But banking consultant Bert Ely is concerned about potentially shifting a troubled financial giant.
Bert Ely:From the bankruptcy courts, to where creditors can get a hearing, into some type of administrative process, where there would be much less, if any, judicial review.
He said the new rules could mean large companies have to start paying a lot more for credit.
I'm Ashley Milne-Tyte for Marketplace.
Thank you Mr. Mason for your feedback. I agree that lobbyists are a very key issue in addressing what has gone wrong with the US. There are not enough Statesman and too many politicians. I cannot remember what my source was or whether I had a basis for accusing Greenspan of twisting Clinton's arm. let me quote Mr. Paul Davidson who believes Rubin and Phil Graham were for the repeal too.
" February 16, 2011 at 10:04 pm | #5 Dean:
Why blame only Greenspan? I think Robert Rubin — who helps Brookings sponsor a project —whose name escapes me at the moment– can share the blame as well. And so is former senator (and economist) Phil Gramm to blame
when Phil Gramm could not get enough votes to repeal Glass Steagall, Gramm is reported, by the Wall Street Journal, to tell the Citi group lobbyist to phone Citi CEO to get on the phone and call the White House immediately and get Clinton to get some democrats behind the bill. Three days later — Clinton comes out for repeal of Glass Steagall– and the same act made credit-default swaps free from any government regulation. Who did Citi CEO phone? Well Robert Rubin who was then Secretary of Treasury ,resgns a few days afer the Gramm bill is passed and Rubin accepts a big $$$ position at Citi which has little responsibility!!
And remember Rubin is responsible for having many of his proteges in the Obama white house and in Brookings."
MH - and the revolving door keeps turning, the big wheels keep on rolling, rolling rolling down the Potomic river, = G.
I agree with Mr. Heineman about bringing back Glass-Stiegel, I do not agree with giving the government the ability to "dissolve"(Bernanke)financial institutions. What is considred a failing institution, every institution runs into hard times. What if we bring back Glass-Stiegel and diversify the American public potfolio so that we don't have so much invested in these huge banks. As Americans we always want to recreate the car instead of just buying new tires. Our politicians need to start delivering the hard truth instead of lobby interest and what looks good for reelection. By the way Mr. Heineman, no offense but Clinton actually forced Greenspan to go along with GS, Citi and other interest including repealing the Glass Act.
It is about time that the people that US citizens voted for start to represent citizens interests. Bring back Glass Stiegel. Break up Goldman Sachs and AIG. Would someone explain why Bear Sterns and Lehman were allowed to close up but we propped up GS? Now GS will be giving out 3/4 million dollar bonuses . Meanwhile, small businesses and individuals still can't get financing. Geitner, Rubin Greenspan all had something in common , they cared more about GS than about the US. Greenspan forced Clinton to go along with the GS interests in his terms as Pres. after Reagan threw us into huge debt
