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Secretary Geithner heads to Congress to report on U.S. financial system

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Steve Chiotakis: Treasury Secretary Tim Geithner is gonna spend much of today before Congress. He’s scheduled to present to both chambers the first report of a council looking at the level of risk in our financial system.

Marketplace’s Amy Scott reports.

Amy Scott: Congress created the Financial Stability Oversight Council to help prevent another crippling financial crisis. Its first report to Congress comes as a debt crisis looms in Europe.

James Barth is a fellow at the Milken Institute. He says the council is surely watching Europe closely.

James Barth: But I don’t think the Financial Stability Council can do much, other than be absolutely certain our banks are not overexposed to other European banks.

Barth says they don’t appear to be. And if a big U.S. bank or insurer were to get into trouble, he says regulators now have tools to contain the problem.

John Liechty directs the Center for the Study of Global Financial Stability at Penn State. He says it’s too soon to say how effective the council will be.

John Liechty: It’s only been a year. And it takes I think a long time to put the kind of safeguards we’d like to see in place.

Like so-called “living wills.” Big banks will soon need plans in place to wind down their business if they get into serious trouble.

I’m Amy Scott for Marketplace.

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