Geithner says to "streamline" regulatory structure

WASHINGTON (Reuters) - U.S. President Barack Obama will lay out a proposal for a financial regulatory overhaul next week that will aim to curb excessive risk-taking on Wall Street, Treasury Secretary Timothy Geithner said on Tuesday.

Geithner said the proposed revamp of financial rules would include systemic risk regulations to stop big firms taking on so much risk that they imperil the entire economy.

“The plan calls for bolstering consumer and investor protection. And it will streamline our out-of-date regulatory structure so that our regulatory system matches the size, shape and speed of our modern financial system,” he told a Senate Appropriations subcommittee.

U.S. officials worry that the country’s patchwork system of regulators is ill-equipped to oversee the complexities of modern finance.

They are weighing a range of options, all of which face potential pitfalls and challenges to secure a green light.

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Geithner said as part of the plan, the administration would propose a new body to bring together differing parts of the current regulatory structure to monitor the overall health of the financial system.

“Together, these changes will help prevent another crisis of the magnitude that we have just lived through, and give the government new tools to better cope with similar problems, should they occur in the future,” Geithner said.


Geithner also told the lawmakers that concern over unwelcome political interference had curbed the appetite that investors might have had to participate in a plan to cleanse bank balance sheets of toxic assets. That plan would rely on public-private partnership seeded with government money.

But he said he remained committed to the initiative.

“These funds still are an important part of the necessary framework of tools to help get our country through this crisis, and I believe it is important that we go ahead and put them in place, even if participation is somewhat more limited than we would have expected,” he said.

He also said the government’s handling of the fallout from the collapse of the U.S. housing market in 2007, and subsequent efforts to mute the pain of foreclosure, could have been better.

“Housing is the center of this crisis. This government should have moved earlier to address this crisis. We were late as a country and behind the curve,” he said.

Geithner, who travels to Italy for a Group of Eight finance ministers’ meeting on Friday and Saturday, said he would continue to push for a worldwide response to the economic slowdown.

“This is a global crisis. Recovery here depends on recovery abroad. We are working closely with other major economies to put in place the fiscal stimulus and make the financial repairs necessary to ensure U.S. and global recovery,” he said.

Additional reporting by Mark Felsenthal, Karey Wutkowski, Lucia Mutikani, Wendell Marsh, Lisa Lambert and Patrick Rucker; Editing by Jan Paschal