WASHINGTON — Treasury Secretary Tim Geithner issued a warning Monday to international regulators that might try to lure business away from U.S. financial markets with the promise of looser regulations abroad.
Geithner said the United States wants to minimize the chances that risk simply moves to other markets and avoid "another race to the bottom around the world," according to excerpts of a speech he is scheduled to deliver to the International Monetary Conference in Atlanta.
"We will do what we need to do to make the United States financial system stronger," he said. "We will do so carefully. And as we do it, we will bring the world with us."
Geithner said the United Kingdom's experiment in a strategy of "light touch" regulation, which aimed to draw business to London away from New York and Frankfurt, "ended tragically."
"That should be a cautionary note for other countries deciding whether to try to take advantage of the rise in standards in the United States," he said.
Geithner also hailed the strength of U.S. financial markets in the years following the Great Depression, when it had the highest standards for investor protection, strongest protections for depositors, and the best exchanges, he said.
"We did not lower our sights to match the more limited ambitions of others," he said. "We knew we would be more vulnerable if we did."
He also called for global minimum standards for margins on uncleared derivatives trades, which he said will help prevent regulatory arbitrage. Without it, risk in derivatives will be concentrated in jurisdictions with the least oversight, Geithner said.
