From the NYT:
The crisis surrounding the American International Group was a near-tragedy that underlines the need for broad new government authority to regulate or even take control of financial institutions other than banks, the government’s top fiscal officials told lawmakers on Tuesday.
Treasury Secretary Timothy F. Geithner said financial crises like those caused by the recklessness of A.I.G. “contain a basic and tragic unfairness — that those who were prudent and responsible in their personal and professional judgments are harmed by the actions of those who were less careful and less prudent.”
The Federal Reserve Chairman, Ben S. Bernanke, agreed with Mr. Geithner that Congress should grant the Treasury Department and Federal Reserve new powers. Mr. Bernanke told members of the House Financial Services Committee that if the government had had such authority in September, when the depth of A.I.G.’s troubles became obvious, the company could have been put into receivership or conservatorship and regulators would have been able to “unwind it slowly, protect policyholders” and take other prudent measures.
