Europe can fix its debt crisis, Treasury chief tells L.A. group
Treasury Secretary Timothy F. Geithnersaid Europe has the tools to fix its financial problems and its leaders remain committed to ending the continent’s debt crisis.
Speaking to the Los Angeles World Affairs Council on Tuesday, Geithner said that central bankers must act swiftly because the problems in Europe are slowing global growth. He had just returned from a trip to Europe where he met with politicians and policymakers.
“This is completely within their financial abilities to solve,” Geithner said. “It’s not a complicated business challenge. It’s a complicated political challenge.”
Geithner stressed that the Eurozone must be “more forceful and more creative and more effective in calming the financial pressures that are doing so much damage to growth.” He also said Greece’s new government is “very much committed to staying” in the Eurozone.
Eurozone leaders have announced a commitment to keeping the union afloat after a volatile week in the European market aroused concerns over the credit health of Spain and Italy. Those fears were eased somewhat last week when Mario Draghi, the head of the European Central Bank, pledged to do “whatever it takes” to preserve the euro.
Geithner addressed other issues, including the nation’s economic recovery and the state of the housing market.
He said it’s important to continue to help the economy improve and push Congress to act on programs that are positive for growth such as spending on infrastructure and education.
Geithner warned that leaders tend to get through the worst of a financial crisis and say, “ ‘Ah, we can relax now. We can put on the brakes, shift our focus to the long-term challenges.’ And that is a very important mistake to avoid.”
Making sure that Wall Street plays by the rules is also a priority in recovering from the financial crisis, he said.
Regulators and other government agencies are working together to crack down on insider trading and other illegal activities, and Geithner said there’s more to be done. He pointed to the recent scandal over Libor, a benchmark used to set interest rates, as an example of the need for more enforcement.
The housing market has also continued to sputter, and Geithner said one mission of the Treasury is to help struggling homeowners refinance their mortgages while interest rates are at historic lows. He also said Congress is weighing legislation that would help the market, including programs directed at people with underwater mortgages, or those who owe more than their homes are worth.
In addition, Geithner said the government is continuing to seek ways to reduce risk in the financial system. He said banks need to increase capital, which would help protect them against loan defaults.
Asked about speculation that he will step down from his job at the Treasury, Geithner hinted he might be ready to move on.
“If you’re a human being,” he said, “you don’t want to do these things forever.”
william.d’urso@latimes.com
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