Oliver Hart and Luigi Zingales
ForeignPolicy.com; March 30, 2009
As Timothy Geithner pushes for an overhaul, it is time to rehabilitate one of the tools that got us into this mess: the credit-default swap.
Just days after announcing his plan to clean up banks’ balance sheets of toxic assets, U.S. Treasury Secretary Timothy Geithner hit the airwaves, priming audiences for his next big project: a regulatory system to ensure that this financial crisis is a one-time event. “[The] core thing is to make sure that the institutions at the center of our financial system are subject to much more conservative, much tougher requirements on capital and leverage,” he told NBC’s David Gregory on Sunday’s Meet the Press. Geithner will be taking his show on the road this week as the G20 convenes in London, where regulation will be high on the agenda.
