Navigating through the Road Bumps in the Financial System

By Courtney Ann Jackson-Talk Radio News Service

We can’t let things go back to the way they were with the United States Financial System according to Treasury Secretary Timothy Geithner Monday. Geithner joined Newsweek Magazine editor, Jon Meacham, at a luncheon interview on the topic of the recession and what American’s should expect as the steps to recovery continue to be put into action.

“This is still the most challenging economic crisis that this country has seen in generations. It took a long time for these problems to build up," Geithner said. "It’s going to take time for us to work through them. We’re not going to have a steady, even process of repair, it’s going to be bumpy, still feel fragile for a while.”

Geithner expressed his sympathy for struggling Americans and said he understands why Americans are angry. He said that even as growth inevitably begins to turn positive, unemployment will continue to increase for awhile. He also said, “It’s not going to feel better for a long time for millions of Americans.”

As the administration continues to work its way through this economic crisis, Geithner believes they need to take a “fresh look” at the financial system as a whole. In terms of speed and quality of initiative that are already in progress, he said he thinks the administration is doing well.

“The American people want to see us moving to change things, not just waiting and hoping,” he said.

Meacham asked Geithner about people’s critique that the administration was being too lenient. Geither replied, “I actually think that what the President has put in place is the most aggressive approach to solving a financial crisis than we’ve seen from any serious country in a very long period of time.”

He also noted that they are doing more preventative work and referred to it as a type of insurance from a greater recession. They are working to make the system more stable and plan to release a new set of proposals in the next few weeks for reforming the oversight framework.

The Clock Is Ticking For U.S. Social Security

By Jonathan Bronstein, Talk Radio News Service

The recent release of the Social Security Board of Trustees report illuminated the dire straits that these two bastions of liberal democracy, Medicare and Social Security, are in, as they are to run out of money much sooner than expected.

“This year’s trust Social Security Report projects that the Trust Fund will be exhausted in 2037, four years earlier than the Trustees report last year,” said Secretary of Treasury Timothy Geithner at a press conference, in which he addressed the future of this program.

But these two entitlement programs will be consuming a disproportionately large amount America’s GDP in the near future, and need to be reformed now to stave off their demise, according to the report.

The main problem with these programs is that they are too expensive and will consume a disproportionately large part of America’s GDP.

“Medicare’s annual costs were 3.2 percent of GDP in 2008, or nearly three-quarters of Social Security’s,” said Geithner, “but are projected to surpass Social Security expenditures in 2028 and to reach 11.4 percent of GDP in 2083, compared with 5.9 percent of Social Security.”

As a result, Geithner stated that “the sooner action is taken the more options for reform will be available and the fairer reforms will be to our children and grandchildren.”

Some of the steps Geithner proposed involved lessening healthcare costs, which President Obama recently did by negotiating a $2 trillion reduction in costs, rehabilitating the economy so that more taxes can be placed into the fund, and to reform Social Security in a "responsible and bipartisan" manner.

Health and Human Services Secretary Kathleen Sebelius echoed Geithner’s need for reform. “The (Social Security Trustees) report was not a government report, but a wake up call,” said Sebelius.

Sebelius bluntly stated that the Medicare fund is spending more than it takes in, and uses assets accrued in the past to make-up the difference, but all of these excess assets will be exhausted by 2017.

Both Geithner and Sebelius stressed that reform of these two entitlement program need reform, and that the Obama Administration is dedicated to making this important change.

“Reform cannot wait,” said Sebelius.
But this change cannot come soon enough for Social Security and Medicare because the longer it takes for change, the more radically different the form will take, according to Geithner.

Need To Close the Gaps In Resolution Regimes

By Kayleigh Harvey - Talk Radio News Service

“From the outset I have argued that our financial system is not merely in need of ‘reform,’ but of ‘modernization,’” said Senator Christopher Dodd (D-Conn.), Chairman of the Senate Banking, Housing and Urban Affairs Committee.

At the hearing, which discussed “Enhancing Investor Protection and the Regulation of Securities Markets,” Senator Dodd asked the Chairman of the SEC Mary Schapiro, “Were you consulted by the Treasury and the Fed? What role do you think the SEC should play in this resolution mechanism, given the oversight and regulatory responsibilities?”

Senator Dodd also asked Ms. Schapiro to “comment on the reports of the regulatory changes that Secretary Geithner has mentioned this morning.”

Ms. Schapiro responded, “generally there was consultation.”

Ms Schapiro added, “We clearly have gaps in our resolution regime for large financial institutions....I fully support the concept of closing the gap in resolution regime so that we have a more coherent approach.”

Senator Chuck Schumer (D-N.Y.) said, “We all believe people should be rewarded for good performance, that’s not the problem, but what we’ve seen in many instances that has enraged Americans is a heads-eye wind tail you lose system. In which executives are rewarded for flashing the pan short term gains, or even worse, rewarded richly when the company does poorly and the shareholders have been hammered.”

Treasury Secretary Geithner comments on new economy policies

Secretary Geithner spoke today about America's financial crises and the new administration's actions. The issue regarding the banks situation worldwide and its important in getting credit flowing again, was emphasized. Without credit the economy cannot grow, Geitner said.

Geithner also stated that the causes are many for the crisis. Part of it is that banks are giving to much credit, taking too many risks, and individual businesses are borrowing too much.

Geither described the jump starting of jobs and ensuring of credit to families and businesses as key issues. He also stated that one of America's current problems is that families all over the country are losing faith in authority. To be able to restore faith among people, the government needs to act and reform new polices. The two pronged approach that was presented was, job creation and private investment, and getting credit flowing again. Geithner presented policies such as a new consumer spending program that will support credit. In addition, a program that makes loans more available. In the upcoming weeks, a housing plan will also be presented.

With the new policies consumers will be able to view more actions that are affecting the lending and borrowing practices of processes of the banks. Actions that the government takes in reference to the banks will help create a new capital effort and help them to get back on track. A new private/public investment fund will also be created to support loans and help private markets. By supporting consumers and business lending, the economy can be turned around. Geithner stated that the new polices will take time, money, and risks by the government.