As markets gyrated last week, Geithner and Bernanke led an emergency conference call of U.S. regulators to discuss potential risks to the U.S. financial system. Officials were especially focused on any evidence of threats to the largest U.S. banks and money-market funds as well as to esoteric but crucial lending markets.
Some officials have been concerned that they would have less latitude than in 2008 to bail out troubled companies because of constraints imposed by Congress, people familiar with the matter said. Others have worried that the turmoil had come before regulators had finished beefing up financial oversight of the markets, as mandated by the financial regulation law enacted last year.
“Until we complete the task and the rules are actually implemented, and we have the funding to cover the expanded mission, the American public is not yet protected,” said Gary Gensler, chairman of the Commodity Futures Trading Commission.
For its part, the White House has been advocating measures to bolster the economy, such as extending a 2 percentage point payroll tax cut that is due to expire at the end of the year. But Obama’s options are limited by politics.