James Pethokoukis

Politics and policy from inside Washington

A few questions for Timothy Geithner on financial reform

June 18, 2009

If I was in Congress and Treasury Secretary Geithner was testifying before my committee (as he is doing today in the House and Senate), I might ask him the following:

1) “Do you think the Fed and the Financial Services Oversight Council would actually raise capital standards or stop certain practices in the middle of a perceived bubble? Wouldn’t they be accused a killing a profitable scenario?”

2)  “Or would they merely warn of a dangerous situation? But if there was no actual regulatory action, wouldn’t that be tantamount to a de facto seal of approval and exacerbate the problem?

3) “Have you just given up on dealing with “too big too fail” since your approach seems to enshrine it and thus create a implicit government guarantee of TBTF institutions? And doesn’t that, then, give then an edge in the marketplace? And wouldn’t that make them even bigger?

4) Was it politics or economic efficiency that led you away from streamlining the regulatory structure?

5) How exactly would you prevent the new consumer financial products safety commission from stifling innovation? Why not just simply better educate consumers and heighten financial literacy?

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