Updated March 29, 2009
Geithner: Government is the Answer to Solve Financial Crisis
AP
The treasury secretary made his debut on Sunday morning talk shows to say that he is very optimistic about his plan to have a private-public partnership buy up "toxic assets."
WASHINGTON -- Treasury Secretary Timothy Geithner defended his approach to fixing the country's economic mess Sunday, saying "the market will not solve this" while disclosing 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 Barack 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 last week announced a program 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 himself, 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 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 to his time at treasury. 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, placing 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.
He 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. Many lawmakers said there was little chance more money will be approved, given the political environment.
Geithner said the bailout plan -- he said about $135 billion remains to help banks stay afloat -- helped every American, not just the financial firms.
"I would not spend a penny on helping a bank for the purpose of helping a bank," said Geithner, taking care with words that can move the markets. "Everything we're doing is for the people that depend on this financial system. Every time we provide assistance to the financial institutions, it's only because we need them to do a better job of getting credit to help reduce the risk of a deeper recession."
Geithner appeared on ABC's "This Week" and NBC's "Meet the Press."
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