Start the conversation
By Don Miller
U.S. Treasury Secretary Timothy Geithner made his first appearances on a host of talk shows on Sunday to promote the Obama administration's efforts to restart the economy. He also warned against attempts to tax investors who join a federal program to buy so-called "toxic" assets from banks.
While Geithner hinted that he might end up going back to Congress for additional funding for banks, he was dogged by persistent criticism from skeptics now questioning whether he has the right stuff to lead the financial system out of the mess.
As Obama's point man on economic matters, Geithner made the rounds on the ABC News program "This Week," and NBC's "Meet the Press" to sell the administration's multi-pronged solution to the ills shackling the economy: Banks need to increase lending to businesses again in order for the U.S. economy to recover from the recession.
"To get out of this we need banks to take a chance on businesses, to take risks again," he said. To do that, "some banks are going to need some large amounts of assistance," Geithner said on the ABC News program.
Geithner said the government would have about $135 billion of the $700 billion in Troubled Asset Relief Program funds approved by lawmakers last October after banks return some of the bailout money.
"We have roughly $135 billion left of uncommitted resources. The rest is out the door," Geithner told George Stephanopoulos on "This Week," refusing to say whether he will ask Congress for more.
Several banks are expected to return about $25 billion of TARP money this year because they were able to replace it with private capital or decided the money comes with too many strings attached, especially regarding executive compensation.
The Obama administration has launched the most costly rescue of the U.S. financial system in history while trying to smooth concerns by taxpayers.
Geithner told "Meet the Press" viewers that the terms of a $500 billion public-private program to aid banks "cannot change" or investors will lose confidence in the plan.
In an effort to buttress his case, Geithner said it was essential the government intervene so banks clean up their balance sheets through the establishment of public-private partnerships to rid banks of assets clogging their books.
The "Public-Private Investment Program," is the administration's strategy to take $500 billion of bad loans and devalued real-estate assets off of bank balance sheets by bringing more private capital into the bank-rescue effort.
According to Geithner, the only way to attract that capital is by honoring the terms of the deals without adding onerous taxes to the package.
"The investors are taking risk, their money is at risk and at stake," he said.
Geithner refused to speculate about whether he will ask Congress for more money this year, but he wouldn't rule it out.
"If we get to that point, we'll go to the Congress and make the strongest case possible and help them understand why this will be cheaper over the long run to move aggressively," Geithner told Stephanopoulos.
"A core part of our plan involves making sure banks have enough capital to provide the lending we're going to need to get recovery back on track," he said, adding that banks need to take risks and need to be in sound condition to do so.
However, most members of Congress probably won't support another request for bailout funds, because they still have questions about where the funds from the $700 billion TARP program were spent.
Sen. John McCain (R-Ariz.), the Republican nominee for president last year, said on "Meet the Press" that the Treasury's efforts to boost the economy have been marked by "a great deal of incoherency for a long time."
"It seemed like every few days there was a target du jour," he said.
McCain also expressed concern about ballooning deficits projected to exceed $1 trillion for many years.
"What I am most worried about is laying the debt on future generations of Americans," he said.
Some members of Congress are beginning to question whether Geithner is the right man to guide the economy back to stability.
Sen. Richard Shelby, (R-Ala.), the Senate Banking Committee's top-ranking Republican, recently told Fox News that Geithner is on "shaky grounds" and he's "losing confidence in him by the day."
"He's going to have to do a 180-degree turnaround, I believe, to be a successful treasury secretary," he said.
News and Related Story Links:
- ABC News:
- NBC News:
- Money Morning:
Will Obama Administration's Banking Sector Fix-It Plan Finally Break the Toxic-Asset Logjam?
- Fox News:
Shelby: Geithner on 'Shaky Grounds'