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Treasury Secretary Timothy Geithner offered a vigorous defense of the administration's fiscal policies and his own personal performance, in a lengthy interview with Charlie Rose on Tuesday night.
The Secretary, under criticism from Republicans and Democrats alike, acknowledged that expectations for actions to resuscitate the markets overtook the scope of the administration's plans. But he insisted that he and the president remain confident in their prescriptions for the crisis and swiped away concerns over a lack of a coherent message and understaffing at the Treasury Department.
"It was always our intention to lay out that broad framework of strategy at the beginning so people could see the full scope of the strategy and then lay out the details," Geithner said, when asked about the negative market reaction to his testimony on the administration's banking policy. "Now, you're right. Expectations got ahead of the policy, and part of those expectations which caused disappointment were the hope that we were going to provide a very generous benefit to the banking system on terms that I didn't think was going to be effective -- defensible for the American tax taxpayer."
The segment, a transcript of which was posted by Greg Mitchell, illustrated both the scope of the economic challenges facing the administration and the deftness that Geithner brings to the task. It was not strictly sunny. Towards the end, the Treasury Secretary said that American capitalism "will be different" and the financial system too. But he expressed confidence that a plan that involved putting banks through stress test, shoring up the housing market, and removing the toxic assets away from the books through a combination of public and private capital would, in the end, get the economy running.
"We start[ed] with a mess, a deep mess, made worse by the deepening recession," Geithner said. "And these things are pitting on themselves. And it's very important for people to understand, it's going to take some time to work through this. But what I want people to know is that we're going to do what's necessary to get through it. And these things will get traction. They will start to help unfreeze things, and they will help lay the foundation for recovery."
On other key issues, here is what the Treasury Secretary had to say.
On criticism that his testimony to Congress was vague and unprepared:
"We always were going to start with a broad strategy and follow it up with detailed, concrete announcements on the details so people could see the path forward"
On the culture of bonuses and executive compensation that has been witnessed in the financial community:
"They made some exceptionally bad judgments. And not just in compensation practice and how they ran their firms, how much risk they took, but as the crisis intensified. And as they got themselves in the position where they needed exceptional assistance from the government, many of those directors made things dramatically worse by continuing to pay out really unjustifiable bonuses to their senior executives and they were losing tens of billions of dollars. That made this basic crisis of confidence much worse, because people understandably looked at that and said how could that be tenable?"
On his predecessor, Hank Paulson, whose handling of the Troubled Asset Relief Program has come under sharp criticism for its ineffectiveness and lack of accountability:
"He faced a set of constraints and judgments at that time about how best to use limited resources. And he decided at that time that he didn't have a viable way to do that. Now, we thought about it a lot since then. We think we figured out a way to do it in a way that's going to make sense for the American taxpayer."
On the possibility of letting a major bank fail:
"I'll say again, they play a critical role in our markets, in our financial system. We want to continue to make sure they play that role. Now, where they need temporary assistance through the government to get through that, we're going to make sure it comes with appropriately tough conditions so that they emerge stronger and that we're providing a level of conditions and accountability that's appropriate in this context."
On a muddled message from Washington:
"[Y]ou have to realize where we started. And we started from a deepening recession here and globally and a huge fiscal hole. And to address that crisis which we inherited, requires the government to act with substantial resources quickly. Now to make it work, you've got to make sure that those resources are going to be effective in getting people back to work and stimulating private investment. And you want them targeting areas, which again, which are going to make America stronger in the longer term. And what we've tried to do at the same time is make sure people understand that when recovery is firmly established, we're going to get back to living within our means as a country"
On whether being under-staffed is a problem: