Beware “new powers”

So Geithner, Obama, and Benanke want Congress to grant them new laws and powers to “unwind” and “seize” non-bank financial corps.  (see Bloomberg story). Implied in this is that somehow this would prevent or could have made AIG turn out different.

I’m not buying it.  FedGov already had the power to stop AIG.  AIG-Fin Products (the really bad boys that did the bad stuff) was already regulated by OTS (Office of Thrift Supervision) which is part of Dept of Treasury.  OTS could have stopped this nonsense long, long ago.  So what’s the new power for?

I’m not the only one that smells trouble when the Pres asks for large, sweeping, vague powers that they promise not to really use.  Yves Smith clearly agrees and writes a real gem here.   Here is Yves’ conclusion:

Yves again. Given the lack of any mention of a special resolution regime, or intent to develop one, the point of this bill is NOT, appearances to the contrary, to be able to put more firms into receivership. It is to get broader authority to bail them out.