It seems that he going to do more to convince

Who should control the financial institutions that pose a risk of systemic and how The issue arose with acuity since the demise of Lehman Brothers in September 2008, after the US Federal Reserve as the Treasury concluded that they lacked the authority to organize a bankruptcy ordered Bank.

This week, the President of the Senate Finance Committee, Barney Frank, introduced reforms, defended yesterday by the Secretary of the Treasury, Tim Geithner, who has suffered a flock of green wood on the part of legislators to any edge. This text institutionalise the "too big to fail", criticised Jeb Hensarling, Republican representative.

Legislators criticized the text supported by the Obama administration to give too much power to the Federal Reserve and Treasury. For the democratic representative Brad Sherman, strongly expressed yesterday, "This gives a permanent authority to come to the rescue of the banks and the powers to the Executive to use the taxpayers ' money without the approval of the Congress".It is, believe, "of the largest transfer of money from the Treasury to Wall Street in the history of the United States".

Independent agencies

The Bill proposes to entrust to the Federal Deposit Insurance Corporation (FDIC) the task of managing the bankruptcy of any large financial institution and not only of banks with deposits. The Federal Reserve would have the right to make the alarm signal and to require an institution to stop certain activities, sell assets and even change his management if a danger to the system. But rather than the single Central Bank responsibility for overseeing the systemic risks, this mission would be entrusted to a Committee consisting of several agencies but chaired by the Secretary to the Treasury.

"It is not that the Treasury has this role, says Kevin Petrasic, former banking regulator and Council Cabinet Paul Hastings.". The last thing we want is that the policy mixes. "The Treasury must be consulted, but it is better to a Committee of independent agencies."This idea is also advocated by Sheila Bair, the President of the FDIC, also seeks to ensure that this Committee can write rules as the minimum threshold for other agencies.

According to Barney Frank Bill, the costs of liquidation would be charged not taxpayers but to large institutions with over $ 10 billion in assets that pay a contribution after (120 in the United States). "This is to charge competitors for risks that they have not taken and that they can in no way oversee."Note Kevin Petrasic. Its meaning, to avoid to pay the taxpayer, it would be better to bring the counterparties that will benefit most from bankruptcy ordered the institution which will spare a systemic crisis. Sheila Bair defends on the other hand the creation of a fund which would help financial institutions and which would have a money problem. But for Tim Geithner, avoid suggest creditors and financial institutions that they are insured in the event that an institution of significance would be bankruptcy. "We do not want to create this expectation, this is why we believe it is better to pay after the facts," explained TimGeithner. The Secretary of the Treasury was is defended, sometimes strongly and with humor sometimes. "In any case, he assured, it is to give a guarantee of the Government to financial institutions. This reform is a comprehensive and coordinated effort to resolve the issue of moral hazard posed by our largest financial institutions...It seems that he going to do more to convince.