Lawmaker backs more power for Treasury Secretary

WASHINGTON (Reuters) - A senior Democratic lawmaker told Reuters on Tuesday that he was willing to give Treasury Secretary Timothy Geithner more authority to oversee the unwinding of financial institutions that are not now federally regulated.

U.S. Rep. Paul Kanjorski, chairman of a House Financial Services subcommittee, said Geithner would be asking for additional authority to oversee organizations like giant insurer American International Group.

Kanjorski said he would work with the Obama administration to give the Treasury Department the additional authority to handle such institutions “if there is a systemic problem involved.

“We can’t have entities like AIG going totally uncontrolled and unregulated when they have such a forceful effect on the economy,” Kanjorski added.

Legislation to create a process for unwinding a failing nonbank financial institution is among the measures expected to come before the House Financial Services Committee for a possible vote on March 31, according to congressional aides.

The Washington Post reported on Tuesday that the White House might ask Congress to give Geithner unprecedented powers to initiate the seizure of nonbank firms such as large insurers, investment firms and hedge funds. Details of the Obama administration’s plan are still in flux, the newspaper said.

Geithner was scheduled to testify on Tuesday at a House Financial Services Committee hearing about the government’s billions of dollars in bailout aid to AIG.

Reporting by Rachelle Younglai; Editing by Lisa Von Ahn