“Geithner Calls for ‘New Rules of the Game’”
On March 26, 2009, during testimony before the Committee on Financial Services of the House of Representatives, U.S. Treasury Secretary Timothy Geithner called for “new rules of the game” in order to repair the erosion of confidence in the financial system caused by fundamental system failures. Secretary Geithner cited such failures as the instability of the system, compensation practices which rewarded short-term profits over long-term return, consumer protection failures, and large amounts of leverage and risk-taking.
Geithner explained that the Treasury Department has been working with the President’s Working Group on Financial Markets to develop a comprehensive framework for regulatory reform, which will target the following four broad areas: addressing systemic risk; protecting consumers and investors; eliminating gaps in our regulatory structure; and fostering international coordination. Geithner focused on the first area – addressing systemic risk – due to its importance to future economic performance and the likelihood that it would be at the top of the agenda at the upcoming G-20 conference on April 2nd.
This Stroock Special Bulletin highlights key elements of Geithner’s testimony regarding the plan to address systemic risk.