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US mulls regulator for takeover, unwinding of financial giants

Source: PTI
March 20, 2009 16:09 IST
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US President Barack Obama has sought to expedite setting up of a regulatory authority for taking over and then unwinding businesses of large financial institutions, such as AIG and Citigroup, media reports said.

"The White House and Congress are rushing to write legislation that allows the federal government to take over and unwind the businesses of a large financial institution, such as AIG or Citigroup, the way it now can with commercial banks," business news channel CNBC reported.

The legislation could be ready for mark-up before Congress' spring recess, which starts April 6, the report quoted an unnamed senior Congressional staffer as saying.

"The President has asked us to fast-track . . . Drafting is going on at both ends of Pennsylvania Avenue," the source said.

The report further said that the new regulatory authority similar to the FDIC's so-called bridge bank powers was originally expected to be included in a broader reform package addressing systemic risk, but now it is being crafted as stand-alone legislation in the wake of the public uproar over the AIG executive bonuses.

Commenting after the AIG uproar, Obama had said that "what we are working on is a resolution authority that would be similar not identical, but similar to the powers that the FDIC currently has over banks."

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