Treasury Secretary Timothy Geithner on Wednesday repeated his call for Congress to pass financial reform legislation that curbs risk-taking by big financial firms and ensures they can absorb their own losses.
Geithner, in prepared testimony on the Obama administration's fiscal 2011 budget plan that was identical to earlier written remarks, told the House of Representatives Budget Committee that comprehensive reforms were needed to ensure growth and ensure Americans' financial safety.
We need a financial system that is safer, in which financial firms, especially large ones, have more capital to absorb their own losses and cannot take risks that threaten the whole economy, Geithner said. Consumers need to be given the information they require to make the decisions that are right for them and they need to be protected from unfair and fraudulent practices.
He added that the government needs to have the authority that it did not have during the financial crisis to break apart and unwind failing firms in ways that limit damage to the system as a whole.
But his testimony did not provide any specifics on the mechanisms for providing such protections. Geithner is scheduled to meet later on Wednesday with U.S. senators Christopher Dodd, the Connecticut Democrat who heads the Senate Banking Committee, and Republican Bob Corker, who has taken a lead role in negotiations on a Senate financial reform bill, to hash out details of the bill.
Key sticking points are Republican opposition to curbs on proprietary trading by Wall Street banks and to the creation of a new consumer financial protection agency.
(Reporting by David Lawder, Editing by Chizu Nomiyama)