Gov't to unveil rules for financial firms
New reports say Congress is about to propose new rules that would give the government more power to take apart financial giants that get into trouble. Ashley Milne-Tyte reports.
House Financial Services Committee Chairman Barney Frank at a hearing on Capitol Hill in Washington, D.C. (Photo by Mark Wilson/Getty Images) (Mark Wilson/Getty Images)
More on America's Financial Crisis
Links
- Audio: Is it better to have a fast bankruptcy?
Banking consultant Bert Ely talks with Stacey Vanek-Smith about the advantages of the government's proposed plan, and how it would affect creditors.
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.
Comments
Comment | Refresh
10/26/2009
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.
From Bayside, NY, 10/26/2009
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
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