Geithner outlines plan to discipline Wall St

Friday, March 27: The Obama administration revealed its ambitions to regulate Wall Street yesterday when US Treasury Secretary Timothy Geithner outlined plans to curb the excesses of the financial sector. The measures are intended to stop the sort of risk-taking that led to the current global economic downturn.

"These failures have caused a great loss of confidence in the basic fabric of our financial system," he said. "We need better, smarter, tougher regulation."

Proposed measures include creating a single body to ensure that major institutions remain stable, ensuring that banks have more conservative capital requirements, and establishing a framework for the derivatives market.

Geithner also announced that hedge funds would be regulated and that, in the future, no company could consider themselves “too big to fail” and rely on the government to step in and save them.

Despite this and a welter of recent announcements from the Treasury Secretary, his stock is not rising in Washington. As Alexander Cockburn reports today in his column for The First Post, the Nobel prize-winning economist and New York Times contributor Paul Krugman continues to give Geithner hell for groveling to Wall Street.

"Even before Geithner unveiled his latest bail-out (in an off-camera presentation planned to mitigate the Treasury Secretary's meagre rhetorical skills)," Cockburn writes, "Krugman was abusing its 'zombie ideas'. No doubt Geithner's insistence... that he yearns for a legislative green light to discipline irresponsible bankers will be duly flayed by Krugman as mere persiflage."

FIRST POSTED MARCH 27, 2009