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Another week, another reason to fire Geithner

June 14, 2010 - Mike Maneval

Efforts by U.S. Treasury Secretary Timothy Geithner to block requirements that financial firms dissolve highly risky derivatives units "shows the access of the major Wall Street banks in the Treasury Department in spades," a Senate aide told Huffington Post.

The proposal, by Senate Agriculture Committee Chairwoman Blanche Lincoln, D-Ark., Ryan Grim and Shahien Nasiripour of Huffington Post report, would require financial firms to isolate derivatives trading from other activities and back the trading with capital on hand, is endorsed by economist Joseph Stiglitz and regional Federal Reserve Bank presidents Thomas Hoenig for Kansas City and Richard Fisher for Dallas.

While Geithner initially has good company in opposing the move by Federal Deposit Insurance Corp. Chairwoman Sheila Bair and economist Paul Volcker, Volcker, the Financial Times indicates Volcker is softening his criticisms. And Stiglitz, who according to Kansas City Business Journal reports says "loopholes in the bill would curtail enforcement and leave the door open for excessive risk taking supported by a government backstop," used Lincoln's recent primary victory to argue stronger regulatory reform is popular with the public.

 
 

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