US proposal to overhaul financial system

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Source: CCTV.com | 03-27-2009 09:44

The United States has unveiled a sweeping overhaul of its ailing financial system. The proposal represents a major expansion of federal authority over the system.

Treasury Secretary Timothy Geithner testifies on Capitol Hill in Washington, Thursday, March 26, 2009. (AP Photo/J. Scott Applewhite)

Speaking to members of Congress on Thursday, Treasury Secretary, Timothy Geithner, said the goal is to repair a system that has proven too unstable and fragile.

He said the changes are needed to fix the flaws exposed by the worst financial crisis to hit the country in seven decades.

Timothy Geithner, US Treasury Secretary, said, "To address this will require comprehensive reform. Not modest repairs at the margin, but new rules of the game. And the news rules must be simpler and more effectively enforced."

The new rules will impose tougher standards on large financial institutions. It will also extend federal regulation for the first time to all trading in financial derivatives, exotic financial instruments such as credit default swaps.

The regulatory reform will require large hedge funds to register with the Securities and Exchange Commission. In addition, it has proposed the creation of a systemic risk regulator to monitor the biggest institutions.

The proposal also includes measures to give the administration expanded powers to take over major non-bank financial institutions, such as insurance companies and hedge funds.

Geithner says President Barack Obama will raise the global supervising standard to a higher level at the upcoming G20 meeting in London.

Editor:Zhang Pengfei