{"page":"\u003clink rel=\"stylesheet\" href=\"https://lessonplanet.com/assets/packs/css/resources-c03aa079.css\" /\u003e\n\u003clink rel=\"stylesheet\" href=\"https://lessonplanet.com/assets/packs/css/lp_boclips_stylesheets-517835be.css\" media=\"all\" /\u003e\n\u003cdiv data-title='Federal Reserve and Treasury Department heads defend Obama plans' data-url='/boclips/videos/5c54c33cd8eafeecae15fcae' data-video-url='/boclips/videos/5c54c33cd8eafeecae15fcae' id='bo_player_modal'\u003e\n\u003cdiv class='boclips-resource-page modal-dialog panel-container'\u003e\n\u003cdiv class='react-notifications-root'\u003e\u003c/div\u003e\n\u003cdiv class='rp-header'\u003e\n\u003cdiv class='rp-type'\u003e\n\u003ci aria-hidden='true' class='fai fa-regular fa-circle-play'\u003e\u003c/i\u003e\nVideo\n\u003c/div\u003e\n\u003ch1 class='rp-title' id='video-title'\u003e\nFederal Reserve and Treasury Department heads defend Obama plans\n\u003c/h1\u003e\n\u003cdiv class='rp-actions'\u003e\n\u003cdiv class='mr-1'\u003e\n\u003ca class=\"btn btn-success\" data-posthog-event=\"Signup: LP Signup Activity\" data-posthog-location=\"body_link_boclips\" data-remote=\"true\" href=\"/subscription/new\"\u003e\u003cspan\u003e\u003cspan\u003eGet Free Access\u003c/span\u003e\u003cspan class=\"\"\u003e for 10 Days\u003c/span\u003e\u003cspan\u003e!\u003c/span\u003e\u003c/span\u003e\u003c/a\u003e\n\u003c/div\u003e\n\u003c/div\u003e\n\u003c/div\u003e\n\u003cdiv class='rp-body'\u003e\n\u003cdiv class='rp-info'\u003e\n\u003cdiv aria-label='Hide resource details' class='rp-hide-info' role='button' tabindex='0'\u003e\u0026times;\u003c/div\u003e\n\u003ci aria-label='Expand resource details' class='rp-expand-info fai fa-solid fa-up-right-and-down-left-from-center' role='button' tabindex='0'\u003e\u003c/i\u003e\n\u003ci aria-label='Compress resource details' class='rp-compress-info fai fa-solid fa-down-left-and-up-right-to-center' role='button' tabindex='0'\u003e\u003c/i\u003e\n\u003cdiv class='rp-rating'\u003e\n\u003cspan class='resource-pool'\u003e\n\u003cspan class='pool-label'\u003ePublisher:\u003c/span\u003e\n\u003cspan class='pool-name'\u003e\n\u003cspan class='text'\u003e\u003ca data-publisher-id=\"30356011\" href=\"/search?publisher_ids%5B%5D=30356011\"\u003eCurated Video\u003c/a\u003e\u003c/span\u003e\n\u003c/span\u003e\n\u003c/span\u003e\n\u003c/div\u003e\n\u003cdiv class='rp-description'\u003e\n\u003cspan class='short-description'\u003e1. Mid of Barney Frank, Democrat House Banking Committee Chairman greeting Timothy Geithner, US Treasury Secretary and Ben Bernanke, Federal Reserve Chairman as he walks into hearing 2. Pan of hearing 3. SOUNDBITE (English) Timothy...\u003c/span\u003e\n\u003cspan class='full-description hide'\u003e1. Mid of Barney Frank, Democrat House Banking Committee Chairman greeting Timothy Geithner, US Treasury Secretary and Ben Bernanke, Federal Reserve Chairman as he walks into hearing \u003cbr/\u003e2. Pan of hearing \u003cbr/\u003e3. SOUNDBITE (English) Timothy Geithner, US Treasury Secretary:\u003cbr/\u003e\"AIG highlights very broad failures of our financial system. Our regulatory system was not equipped to prevent the build up the dangerous levels of risk, compensation practices rewarded, short term profits over long term financial stability, overwhelming the checks and balances in the system. We came into this crisis as a country - and this is a tragic thing - we came into this crisis without the authority and tools, necessary to contain the damage to the American economy, posed by the very severe pressures working through the financial system. Now I share the anger and frustration of the American people, not just about the compensation practice at AIG and other parts of our system but that our financial system permitted a scale of risk-taking that has caused grave damages to so many lives of Americans.\"\u003cbr/\u003e4. Pan to Geithner\u003cbr/\u003e5. SOUNDBITE (English) Timothy Geithner, US Treasury Secretary:\u003cbr/\u003e\"We need to extend those protections and authorities to cover the risks posed by our more diverse and complicated financial system today and we are proposing legislation to provide those tools and look forward to working with this committee and the congress to pass such legislation as quickly as possible. The proposed resolution authority would allow the government to provide financial assistance to make loans to an institution, to purchase its obligations or assets, to assume or guarantee its liabilities and purchase an equity interest. The US government as conservator or receiver would have additional powers to sell or transfer the assets or liabilities of the institution in question, to re-negotiate or repudiate institutions contracts and prevent certain financial contracts within the institution from being terminated on a count of conservatorship or receivership. This proposed legislation would fill a significant void in the current financial services regulatory structure in respect to these large, complex institutions; an implementation we modelled on the resolution authority that the FDIC has under current law with respect to banks.\"\u003cbr/\u003e6. Cutaway of Geithner, Bernanke and William Dudley, president and chief executive office of the Federal Reserve Bank of New York\u003cbr/\u003e7. SOUNDBITE (English) Ben Bernanke, Federal Reserve Chairman:\u003cbr/\u003e\"My reaction upon becoming aware of these specific payments was that, notwithstanding the business purposes that might be served by this action, it was highly inappropriate to pay substantial bonuses to employees of the division that had been the primary source of AIG's collapse. I asked that the AIG-FP payments be stopped but was informed that they were mandated by contracts agreed to before the government's intervention. I then asked that suit be filed to prevent the payments. Legal staff counselled against this action, on the grounds that Connecticut law provides for substantial punitive damages if the suit would fail; legal action could thus have the perverse effect of doubling or tripling the financial benefits to the AIG-FP employees.\"\u003cbr/\u003e8. Mid of Geithner, Bernanke and Dudley\u003cbr/\u003eUS Treasury Secretary Timothy Geithner called on Congress Tuesday to grant him new powers to regulate huge financial companies like insurance giant AIG, whose failure could pose a grave danger to the US financial system and the broader economy.\u003cbr/\u003eSpecifically, Geithner wants powers similar to those of the Federal Deposit Insurance Corporation, which has authority to seize control of banks, take over their bad assets and sell good ones to competitors.\u003cbr/\u003e\"AIG highlights broad failures of our financial system,\" Geithner told the House Financial Services Committee and warned that measures must be taken to ensure the country never faces a similar situation again.\u003cbr/\u003eFederal Reserve Chairman Ben Bernanke, appearing with Geithner before the House Financial Services Committee agreed and said the government's bailout of troubled insurance giant American International Group Inc. underscores the urgent need to safely wind down financial giants on the verge of collapse and subject them to much stronger regulatory oversight.\u003cbr/\u003eMuch of the discussion centered on ways to help the government better deal with future AIG-like companies whose failure could devastate the financial system and the drag down the economy.\u003cbr/\u003eGeithner made it clear he believes the treasury secretary should be granted unprecedented power, after consultation with Federal Reserve Board officials, to take control of a major financial institution and run it. \u003cbr/\u003eThe treasury chief is an official of the administration, unlike the FDIC, which is an independent regulatory agency.\u003cbr/\u003eBernanke and Geithner were braced for a scolding before lawmakers over the handling of bonuses at American International Group Inc., which has become a symbol of reckless risk-taking on Wall Street.\u003cbr/\u003eFor his part, the Fed chief said he wanted to sue to stop insurance giant AIG from paying (m) millions in bonuses, but lawyers advised against doing so.\u003cbr/\u003eAIG is a globally interconnected colossus, with 74 (m) million customers worldwide and operations in more than 130 countries. \u003cbr/\u003eThe government decided it was simply too big to let fail.\u003cbr/\u003eBernanke told the panel its failure could have resulted in a 1930s-style global financial and economic meltdown, with catastrophic implications for production, income and jobs.\u003cbr/\u003eAs a result, the government has bailed out AIG four times, to the tune of more than 180 (b) billion US dollars altogether. \u003cbr/\u003eThe company recently paid at least 165 (m) million US dollars in bonuses to employees who worked in the financial products division that has been blamed for the its near-collapse. The bonuses came even as AIG reported a stunning 62 (b) billion US dollars loss, the biggest in US corporate history.\u003cbr/\u003eNew York Attorney General Andrew Cuomo said on Monday that 15 employees who received some of the largest bonuses from AIG have agreed to return them in full, totalling about 50 (m) million US dollars.\u003cbr/\u003eBernanke said it was \"highly inappropriate to pay substantial bonuses\" to the employees. \u003cbr/\u003eBernanke said he asked that the payments be stopped but was told that they were mandated by contracts agreed to before the government seized control of AIG on September 16.\u003cbr/\u003e\"I then asked that suit be filed to prevent the payments,\" he said. \u003cbr/\u003eBernanke said that his legal staff counselled against this action on the grounds that Connecticut law provided for substantial punitive damages in the event any such suit failed. AIG's financial products division has a base in Connecticut.\u003cbr/\u003eAIG's decision to pay (m) millions in bonuses has created a public relations headache for US President Barack Obama at a time when he is trying to gather public and political support for his economic policies, bank-rescue plan and overhaul of the nation's regulatory structure.\u003cbr/\u003eThe FDIC-like powers being sought by Geithner would allow the treasury secretary to set up a conservatorship or receivership for a failing financial company. \u003cbr/\u003eThe government would have the power to take control of the firm and sell or transfer parts of it to reduce its risky position.\u003cbr/\u003eThe secretary also would be allowed to make loans, buy assets, guarantee loans and make equity stakes to help stabilise the company. \u003cbr/\u003eImportantly, Geithner said the government would have the power to \"renegotiate or repudiate\" a company's contracts, including those with its employees.\u003cbr/\u003eIf 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