The Obama administration is seeking expanded powers to monitor large financial firms, regulate the amount of risk they can take, and create an orderly way to take over a company if it poses a risk to the financial system.
The changes need congressional approval, and Treasury Secretary Timothy Geithner offered details of the sweeping proposals at a hearing Thursday. The government already has the power to seize failing banks, dispose of their bad loans, and install new management.
The new proposals would allow the government to use a similar process with non-bank financial institutions, like the failed insurance giant AIG. The plan calls for more scrutiny of major financial firms like hedge funds and more oversight of complex financial products like derivatives.