Fighting talk as Geithner wants action

US TREASURY Secretary Tim Geithner yesterday testified before lawmakers, as he fought for proposals from President Barack Obama which will lead to the biggest overhaul of the US system of financial regulation since the 1930s.

Geithner yesterday urged Congress to act quickly on the administration’s reforms, saying past efforts had started too late after the will to act had faded. The plans include stricter market oversight and stronger consumer protection.

Geithner said: “If this crisis has taught us anything, it is that risk to our financial system can come from almost any quarter so we must be able to look in every corner and across the horizon for dangers.”

However, he was hit by an assault from senior US lawmakers on the centrepiece of the Obama administration’s financial reform plan, giving the Federal Reserve new power to police broad risks in the economy.

Under the proposal the Fed will be given enhanced powers to supervise and seize control of large institutions deemed “too big to fail”.

The Fed has been heavily criticised for its handling in the run-up to last years financial meltdown and many query its current abilities.

Geithner conceded that changes to the current system would not enable the Fed to protect the markets against every threat, but he maintained that empowering the Fed made the most sense given the circumstances.

Geithner’s plans to form a “council of regulators” to monitor systemic risk was revealed as having no power to enforce recommendations, or any veto over the Fed’s decisions.