Geithner Feels The Heat From Both Sides Of The Aisle

By Sofia Sanchez-University of New Mexico/ Talk Radio News Service

U.S. Treasury Secretary Timothy Geithner faced strong, bipartisan criticism Tuesday during a hearing with the Senate Finance Committee over the president's proposed budget for fiscal year 2011.

Jim Bunning (R-Ky.) hit Geithner with questions about the AIG bailout.

"I want to give you a chance to set the record straight. Why did you believe AIG could not afford to fail?" asked Bunning.

Geithner responded "we believe that the failure of AIG would have been catastrophic to the stability of the financial system."

Sen. Jay Rockefeller (D-W.VA) expressed his disappointment with the administration's proposed incentives for renewable energy, which Rockefeller said could hurt the coal power industry, a powerful player in his home state.

"Thank goodness this is the president's budget. it's staying power might be a week or two. We write the legislation," quipped Rockefeller.

Geithner responded, "we are very supportive of making significantly larger incentives and subsidies to encourage clean energy including clean coal." However, when asked by Rockefeller whether the support for the coal industry was included in the budget, Geithner conceded that it was not.

Geithner: Where is the money going?

by Suzia Van Swol & Christina Lovato, University of New Mexico-Talk Radio News Service


In a Senate Budget Committee hearing today Secretary Treasury, Timothy F. Geithner, addressed the crisis involving financial and housing markets. On Tuesday, Feb. 10, 2009, Geithner proposed establishing a Financial Stability Plan that will restart the flow of credit, provide aid for homeowners and small businesses, plus strengthen the financial system.

Geithner stated that in order for this plan to work it will utilize resources from the Government and from the Congressional Emergency Economic Stimulization Act. Senator Jeff Sessions (R-AL.) stated, “In the Paulson-Geithner, Secretary of Treasury new world, decisions allocating huge sums of money, picking some private companies as winners and others are seen to be made behind close doors. There is no hearing, there is no transcript that I know of and little justification for how those decisions are made... This goes against, I think, the American heritage of law, individual responsibility, congressional oversight and accountability, limited government and free enterprise.”

The Financial Stability Plan proposed by Geithner, is made up of a financial stability trust which will be set up to manage the government’s investments in US institutions, a public/private investment fund which will be designed to bring private sector equity contributions to make large-scale asset purchases and a website that will be available to the public so that taxpayers will have the right to know whether these programs are succeeding in creating lending and financial stability.

“I also believe there is no escaping this, if we are not forceful now it will be harder for us to get our fiscal position back into a sustainable position because we will suffer from a greater loss of productive capacity, a greater erosion of our revenue base, and all those challenges will be more difficult to solve. We’re starting of course from a deeply, just a huge deficit and a hugely damaged system. But the most fiscally responsible course now, i believe is to try to move aggressively to address those problems because ultimately it will be less costly to the American people.” Geithner said.

Geithner: Man of the hour

by Christina Lovato, University of New Mexico-Talk Radio News Service


Today after the trillion dollar stimulus package passed, Timothy F. Geithner, Treasury Secretary, addressed the issue of a Financial Stability Plan that he is proposing to establish. Geithner said “One reason why this crisis is so damaging and has become so acute is because we did not move soon enough to recognize scale of risks this country faced and put together a comprehensive program.”

The plan includes a Capital Assistance Program which includes a “stress test” for the financial institutions. It would require an assessment of whether these institutions have the capital necessary to continue lending money. It also includes a public/private Investment Fund which would be utilized by public financing to leverage private capital.

The public would have access to view where this money would be going to and to whom as well. It is called the “Taxpayers’ Right to Know.” All of the information reported to Treasury by recipients of capital assistance will be posted on a website called financialstability.gov. “The American people will be able to see where their tax dollars are going and the return on their government’s investment. They will be able to see whether the conditions we placed on banks are being met and enforced. They will be able to see whether boards of directors of institutions receiving assistance are being responsible and careful with taxpayer dollars and how they’re compensating their senior executives.” said Geithner.

Geithner also stated that this lending program will be built on the Federal Reserve’s Term Asset Backed Securities Loan Facility, which was announced last November, with capital from the Treasury and financing from the Federal Reserve.