U.s. Financial System | featured news

A report to be released Thursday questions the Bush administration’s decision to rescue “a company that apparently posed no systemic risk to the financial system.”

Members of a government committee questioned whether the support that Citigroup received could pose future risks for the financial system.

Despite the massive repayments of TARP money coming from our biggest banks, the financial system is still very much dependent on the rescue operations of the government.

Perhaps the best illustration of this is the massive balance sheet of the Federal Reserve, which has inflated by purchases of $1.058 Trillion of mortgage backed securities.

Bernanke called on Congress to act on financial reform efforts, as the central bank itself works to implement a number of measures that should help shore up the financial system.

Some senators criticize a plan that would give the Federal Reserve more power to police large companies.

Officials say the financial system's recent thaw owes less to any single program than to a growing confidence that the government will take action.

The Obama administration's aggressive plan for strict scrutiny of hedge funds and other freewheeling investors, part of the biggest expansion of financial restraints since the Great Depression, is drawing instant opposition from Republican lawmakers and the rules' targets. And skeptics are questioning whether the new rulebook would work anyway.

Treasury Secretary Timothy F. Geithner plans to propose today a sweeping expansion of federal authority over the financial system, breaking from an era in which the government stood back from financial markets and allowed participants to decide how much risk to take in the pursuit of profit.

The U.S. Treasury Department is likely to unveil as soon as next week a three-part plan to relieve the U.S. financial system of the toxic assets that have been clogging up the banks' balance sheets, a source familiar with the plan said on Saturday.

Major U.S. stock market indexes tumbled more than 3% today to their lowest levels in more than a decade as confidence in the financial system and the overall economy continued to deteriorate.