Treasury Secretary Timothy F. Geithner recently spoke about some important financial issues on NBC’s Meet the Press. Here are his views on two issues that are likely to be in the news for the next few days.
Financial System Overhaul
Geithner reiterated that America needs some serious financial changes. The Democrats have introduced the financial reform bill, which is likely to ensure that there is a system for preventing future bailouts of financial firms if their failure will hurt the economy.
The legislation will also create a consumer protection agency at the Federal Reserve and will strengthen checks on hedge funds and the derivatives market. According to Geithner, it will prevent situations like the Lehman Brothers bankruptcy, which triggered a global financial crisis.
However, to bring the legislation in force, the support of both the parties may be needed. Currently, the legislation seems to be facing disapproval of the Republicans, with the Senate Minority Leader Mitch McConnell calling it a ‘bailout bill’. Republican lawmakers also believe that the government is merely supporting weak firms through this bill.
Geithner said that he is sure both parties will come together and pass the bill as he has gathered from his discussion with the Republicans that they are not totally against it. He also added that the government is not trying to bailout firms that have made wrong decisions, but merely trying to shield the economy from the impact of their failure. He said that a large number of people lost their jobs and houses because of the recession, and the political parties had no choice but to keep their disputes aside and work on effective financial reform.
He also clarified that taxpayers’ money will not be used for this purpose. Large financial firms will have to make payments in a fund that will be used for any government help in future.
Suit against Goldman Sachs
In the same interview, Geithner refused to make a statement about the suit that the Securities and Exchange Commission has instituted against Goldman Sachs Group Inc. He stated that the investigation is still going on and this was not the time to comment on the issue. He however emphasized on the need for a stronger system to protect Americans from misconduct on part of big corporations. The rules should not merely punish after the misconduct is done, but should be able to prevent these things from happening, he said.