Home > Economy, Politics, Trends > Real Talk, More Bailouts Possible

Real Talk, More Bailouts Possible

January 13, 2011

Treasury Secretary Tim Geithner told a government watchdog that Dodd-Frank reduced the likelihood of bank blowups, because financial institutions now need to keep more capital for a rainy day.

But Geithner also didn’t rule out more bailouts, according to a report released today from the TARP inspector general’s investigation into the 2008 bailouts of Citigroup. Here’s what Geithner said, according to the office of inspector general report:

“The size of the shock that hit our financial system was larger than what caused the Great Depression. In the future we may have to do exceptional things again if we face a shock that large. You just don’t know what’s systemic and what’s not until you know the nature of the shock. It depends on the state of the world – how deep the recession is. We have better tools now, thanks to Dodd-Frank. But you have to know the nature of the shock.”

Source: WSJ blogs

%d bloggers like this: