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Treasury chief urges Congress for fast action

THE United States administration wants Congress to act quickly on legislation that would give it sweeping new powers to seize financial firms whose collapse could jeopardize the US economy, Treasury Secretary Timothy Geithner said yesterday.

In a speech in New York, Geithner said the US should never again be faced with having to choose between a meltdown of the financial system and taxpayer bailouts.

The new legislation, which Geithner said will be sent to Congress this week, would give the administration the power to take over financial institutions such as troubled insurance giant American International Group Inc.

That would give the administration the same authority to seize non-bank financial companies as federal regulators have with banks.

"One of the key lessons of the current crisis is that destabilizing dangers can come from financial institutions beyond banks, but our current regulatory system provides few ways to deal with these risks," Geithner said in remarks to the Council on Foreign Relations.

In response to a question, Geithner said he had not seen a recent article by the head of China's central bank, Zhou Xiaochuan, in which he called for a new currency to eventually replace the dollar as the world's major reserve currency. But Geithner praised Zhou and said he looked forward to reading the article. Those comments immediately sent the dollar plunging on world currency markets.

In an effort to contain the damage, Roger Altman, a former deputy Treasury secretary in the Clinton administration, asked Geithner later to clarify his comments, asking if he had meant to imply that the dollar should no longer be the world's major reserve currency.

Geithner said he did not see any immediate change in the dollar's position.


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