Today in his testimony before Congress Treasury Secretary Timothy Geithner outlined his plan to impose stricter regulation over non-bank corporations like A.I.G. where the firm is big enough that its failure would pose a significant risk to the larger economy.
Geithner Proposes Vast Expansion of U.S. Oversight of Financial System
"The framework will significantly raise the prudential requirements, once we get through the crisis, that our largest and most interconnected financial firms must meet in order to ensure they do not pose risks to the system," Geithner said yesterday in a speech before the Council on Foreign Relations in New York.
"Destabilizing dangers can come from financial institutions besides banks, but our current regulatory system provides few ways to deal with these risks," Geithner said yesterday. "Our plan will give the government the tools to limit the risk-taking at firms that could set off cascading damage."
Why should we continue to allow corporations to grow so large that their failure would threaten our entire economy? Its time we break up mega-corporations like A.I.G.
Geithner's proposal while it is a huge step forward that we desperately need, essential to restore transparency in the markets and restore confidence, it still doesn't go far enough. We are in the mist of an object lesson in the form of a financial collapse that is bringing down the larger economy as a result of the sheer scale of these mega-corporations. These mega-corporations are the same ones that have used their enormous financial resources to wield inordinate influence in our financial resource hungry political system to remove governmental safeguards in place to protect the public's interests.
Americans can't continue to let mega-corporations put our economy at risk, and distort our government's priorities for their gain and our detriment. The very existence of these mega-corporations almost insures their dominance over our present form of government and the resulting distortion of governmental priorities to ones that serve the mega-corporations, almost guaranteeing more crisises to come.