Timothy Geithner Outlines Bill for Seizure of Non-Bank Financial Institutions

Timothy Geithner has been busy this week, making statements and unveiling plans. Today he revealed the outline of legislation the Treasury Department is planning on sending to Congress soon. The bill is meant to give the government the power to seize control of non-bank financial institutions on the verge of collapse. Some of the requirements are set forth in The Wall Street Journal:

Under the bill, the Treasury secretary would have to make "triggering determination" before invoking resolution authority. The secretary would have to find that the firm is in danger of becoming insolvent, that its insolvency would have serious adverse effects on the economy and financial stability, and that taking emergency action would avoid those adverse effects.

"The decision whether to provide financial assistance to the institution or to put it into conservatorship/receivership will be made by the Secretary and the FDIC, and will be informed by the recommendations of the Federal Reserve Board and the appropriate federal regulatory agency" if different from the FDIC, Treasury said.