Geithner and Summers writing in the Washington Post

Obama to propose regulation overhaul Wednesday - Jun. 15, 2009:

"In a commentary published in Monday's Washington Post, Treasury Secretary Timothy Geithner and the Director of the National Economic Council, Lawrence Summers, defended the need for an tighter regulatory control.

'The financial system failed to perform its function as a reducer and distributor of risk,' Geithner and Summers wrote. 'The economic pain felt by ordinary Americans is a daily reminder that, even as we labor toward recovery, we must begin today to build the foundation for a stronger and safer system.'

Developments in the financial markets have outstripped developments in the regulatory system, Geithner and Summers said, leaving markets virtually unregulated. 'The goal is to create a more stable regulatory regime that is flexible and effective; that is able to secure the benefits of financial innovation while guarding the system against its own excess.'

The two officials said the proposal will focus on five points, including the need for deeper cash reserves at major financial institutions. Those firms with a web of impact on other firms,'interconnected firms,' will be moderated by a consortium of Federal Reserve leaders.

In addition, the proposal intends to impose stricter reporting standards for asset-backed securities"