Obama to request power to seize more firms

In a move to get tighter control over non-bank financial companies, such as large insurers, investment firms and hedge funds, the Obama administration will ask for the ability to seize these non-bank institutions when their failure could result in systemic risk. Treasury Secretary Timothy Geithner is expected to testify in a hearing today on Capitol Hill arguing for these new powers.

The Obama administration believes that had these powers existed, the government could have seized AIG last fall and winded down its operations at a much lower cost to taxpayers. These new powers would give the government much broader authority than the existing model of financial regulation, which tends to rely on independent agencies shielded from the political process. The Treasury secretary would have the power to exercise these new powers after consultation with the White House, the Federal Reserve and other regulators.