WASHINGTON, D.C. ( TheStreet) -- Treasury Secretary Timothy Geithner is speaking Thursday on Capitol Hill about his view for regulatory reform of the financial system, telling a Congressional committee he believes a comprehensive overhaul of the current system is "essential." A prepared statement released prior to the appearance before the Joint Economic Committee begins with a brief recounting of progress made to this point in dealing with the financial crisis. Geithner then lists some of the faults of the system that he feels contributed to the turmoil and states: "And unfortunately the regulatory regime that failed so terribly leading up to the financial crisis is precisely the regulatory regime we have today. That is why recovery alone is not enough." In his statement, Geithner talks about four key principles he feels should be kept in mind when crafting regulation to the reform the financial system, saying that firms must not be able "to escape or avoid regulation by choosing one legal form over another," that clear regulatory accountability must be established, that the system as a whole must be "more capable of absorbing shocks and coping with failures," and that no institution should be considered "Too Big To Fail." The remarks elaborate on Geithner's thoughts about the proposal put forth earlier this month by Sen. Christopher Dodd, a Democrat from Connecticut who chairs the Senate Banking Committee. Geithner said he's working closely with Dodd and Rep. Barney Frank, a Democrat from Massachusetts, the chairman of the House Committee on Financial Services, on financial reform legislation.
Dodd's proposal seeks to strip the Federal Reserve of its supervisory power over banks, create a consumer protection agency, restrict the Fed's ability to issue emergency funds to financial companies, and set up an agency specifically to unwind institutions when necessary, among other things. Geithner seems to be on the same page. "The proposed resolution authority would not authorize the government to provide open-bank assistance to any failing firm," he stated. In other words, the authority would facilitate the orderly demise of a failing firm, not ensure its survival." Geithner's appearance on Capitol Hill began earlier this morning and is ongoing. He was quoted by Dow Jones as saying he "wants to put TARP
the Troubled Asset Relief Program out of its misery." Companies that still owe the government TARP funds include American International Group ( AIG), Bank of America ( BAC), and Citigroup ( C). Goldman Sachs ( GS) and JPMorgan Chase ( JPM) are among those companies that have already paid back TARP funds. Written by Michael Baron in New York.