Change would give US power to seize firms
'Resolution' unit would take over toxic assets
WASHINGTON - President Obama said yesterday he will seek new powers that would allow his administration to seize troubled companies such as the insurer AIG - and take ownership of their toxic assets - if their collapse would threaten the financial system.
Obama said his administration will fast-track new financial industry oversight that includes a "resolution authority" that would have powers similar to those of the Federal Deposit Insurance Corp., which can seize control of banks, take over their bad assets, and sell the good ones to competitors.
"Nobody here was responsible for supervising AIG and allowing themselves to put the economy at risk by some of the outrageous behavior that they were engaged in," Obama said. "We are responsible, though. The buck stops with me. And my goal is to make sure that we never put ourselves in this kind of position again."
Obama touted the idea as his top officials and members of Congress scrambled to deal with public outrage over millions in employee bonus payments made by
In more pointed terms than before, the president assailed AIG for its business practices, saying it was "outrageous" that the government was being forced to "clean up after AIG's mess." "I don't want to quell anger. I think people are right to be angry. I'm angry," the president said. "What I want us to do, though, is channel our anger in a constructive way."
Obama vigorously defended Treasury Secretary Timothy Geithner, who has been attacked by Republicans for his handling of the AIG bonus issue.
Standing on the White House lawn as he prepared to go to California, Obama told reporters that Geithner "is making all the right moves in terms of playing a bad hand."
"There has never been a secretary of the treasury, except maybe Alexander Hamilton, right after the Revolutionary War, who's had to deal with the multiplicity of issues that Secretary Geithner is having to deal with, all at the same time," said Obama, with Geithner standing at his right elbow. "And, you know, he is doing so with intelligence and diligence. Nobody's working harder than this guy."
Geithner was scheduled to discuss the "resolution authority" idea with House Financial Services Committee Chairman Barney Frank, who talked to Obama about it yesterday.
Administration officials did not provide any details on how the new resolution authority would be financed. That could be a key sticking point in Congress.
The new authority would be part of a broader regulatory reform agenda that Obama is preparing to send to Congress in an effort to deal with lax oversight that many blame for creating the current financial crisis, the worst to hit the country in seven decades.
The broad outlines of the overhaul are expected to be unveiled as early as next week, before Obama attends the Group of 20 meeting of major industrial countries and developing nations in London on April 2. European countries have pushed the administration to take a tougher approach to financial regulation, believing it was lax enforcement in the United States that led to the crisis that has now pushed the global economy into recession.