Hot Docs: Geithner's Request for Broader Regulatory Powers

Today's selection of timely reports.

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Treasury Secretary Wants Broad New Powers: The treasury secretary is calling for broad new regulatory powers to handle financial institutions like AIG. In testimony before the House Financial Services Committee, Secretary Timothy Geithner argued that all financial institutions and markets "that could pose systemic risk" to the economy should be regulated and subjected to the same type of oversight that the government now has over banks through the Federal Deposit Insurance Corp. He noted that even though AIG was one of the world's largest insurance companies, with a trillion-dollar balance sheet, the government had little authority over it. "The lack of an appropriate regulatory regime and resolution authority for large nonbank financial institutions contributed to this crisis and will continue to constrain our capacity to address future crises."

CFR Report Says Regulation Alone Not the Answer: The idea that more regulation alone can prevent a repeat of the current financial crisis is "dangerously simplistic." That's the conclusion of a Council on Foreign Relations report titled "Lessons of the Financial Crisis." The study, by senior fellow Benn Steil, calls for major economic reform to cut back on excessive corporate and individual borrowing. "The crisis offers a sobering lesson about the dangers of policies that fuel the rapid buildup of debt across the economy. Excessive leverage in the economy needs to be prevented because credit does not return to normal once asset prices stop rising and start falling. It becomes dangerously scarce." Among other things, Steil calls for dramatically scaling back mortgage interest deductibility and home equity loan interest deductibility from federal income taxes "once the housing market has revived."

Readiness for Bioterrorism Up: A 2004 program designed to help cities prepare for a bioterrorism attack or outbreak of disease has improved the level of readiness of metropolitan public-heath agencies. The Rand Corp.'s Center for Domestic and International Health, in its study "Initial Evaluation of the Cities Readiness Initiative," reports that the program, now active in 72 cities, has improved the ability of public-health agencies to distribute medications and supplies quickly and over a large area. The Cities Readiness Initiative has spent about $300 million to promote improvements in the 72 metropolitan areas, which are home to 57 percent of the nation's population. The program is run by the Centers for Disease Control and Prevention and has a goal of getting medications to 100 percent of the population within 48 hours of an anthrax attack or an outbreak of an infectious disease.