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Geithner promotes plan: 'The great risk for us is we do too little,' he says
Treasury Secretary Timothy Geithner dismisses critics who say that too much spending will send the economy into out-of-control inflation. "Will never happen," he says.
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Published: March 30, 2009
WASHINGTON
Treasury Secretary Timothy Geithner defended his approach to fixing the country's economic mess yesterday, saying "the market will not solve this" while disclosing that a bailout fund for battered banks has $135 billion left and might need more.
Geithner used his first Sunday talk-show appearances to promote President Obama's massive government spending plan to ease credit, help borrowers and inject billions of dollars into the financial sector. Long kept behind the scenes, the treasury secretary has emerged as the administration's champion of a plan that fueled an uptick in Wall Street markets.
"We came through a period where people borrowed too much and we let our financial system take on much too much risk," Geithner said. "And the consequences of those choices, made over years, were a huge boom. And that boom, the air is now coming out of that and that's causing enormous damage."
Obama and his administration announced a program last week to help banks free themselves of so-called "toxic assets." These investments have tied up capital and kept them from resuming more normal lending to consumers and businesses.
The plan calls for the administration to partner with private investors, the Federal Reserve and the Federal Deposit Insurance Corp. to buy as much as $1 trillion in toxic assets from banks. Like the president, Geithner cautioned against immediate expectations.
"It's very important for people to understand that, you know, it took us a long time to get into this mess. It's going to take us a while to get out of this," he said. "Progress is not going to be even. It's not going to be steady."
Geithner said that Washington alone was equipped to salvage an economy that has seen jobs lost and credit shrink.
"The market will not solve this. And the great risk for us is we do too little, not that we do too much," he said.
Geithner has faced a rough start in his role as treasury secretary. Unpaid taxes cost him votes during his Senate confirmation, and lax oversight for embattled American International Group Inc.'s bonuses drew Republican calls for his resignation. Wall Street scoffed when he outlined early details of the administration's financial plan, putting him on the bench early.
Obama's financial team, however, turned to Geithner in recent days to bolster its case for the economy. The former head of the Federal Reserve Bank in New York, Geithner confidently brushed off Republican criticism that too much spending would send the economy into out-of-control inflation.
"Will never happen. Because we have a strong, independent Fed, with a clear authority from the Congress to keep inflation low at -- stable at low levels going forward," he said.
Geithner also dismissed his critics, citing the nation's anger and frustration with the economy.
"And I knew we were going to face really tough choices," he said. "We were going to have to do things that are going to be deeply unpopular, hard to understand. We're not going to get it perfect everywhere.... This job, it comes with a lot of heat by definition and there's nothing surprising in that."
Despite that frustration, Obama would not rule out a second round of bailouts. In its budget request to Congress last month, the administration included a placeholder for an additional $750 billion in bailout funds.
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