Transcript: Geithner's Opening Statement

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Wednesday, January 21, 2009 12:29 PM

TREASURY SECRETARY APPOINTEE TIMOTHY GEITHNER: Chairman Baucus, Ranking Member Grassley, and members of the committee, it is a great honor for me to stand before -- to sit before you today.

I want to thank you for meeting with me over these last few weeks and for giving me a chance to hear your interests and your concerns.

I am deeply grateful to the president for asking me to lead the Treasury Department of the United States at this critical moment in our nation's history.

And I am particularly grateful to my wife, to my family for all their support and for their sacrifice.

I want to thank Senator Schumer and Paul Volcker for their kind words this morning. I'm very grateful to you -- to you both for sitting -- sitting with me -- with me here today.

Throughout my career, I have had the great privilege of serving our country in institutions responsible for U.S. economic policy. In these roles, I have learned some very important lessons about government and about economic policy.

I believe that confidence in the strength and integrity of our financial system, confidence in our commitment to fiscal prudence, and confidence in the value of our currency are absolutely critical to the fortunes of all Americans. I believe that markets are central to innovation and to growth, but that markets alone cannot solve all problems. Well-designed, strongly enforced financial regulations are absolutely essential to protecting the integrity of our economy.

I also believe that as America's economic fortunes become ever more closely tied to those of the rest of the world that we need to invest more at home in helping Americans deal with the challenges of trade and technological change. And finally, I believe that our national security depends critically on our economic strength. We can have a great and positive impact on the global economy, but only if the quality of our ideas and our actions win the support of other nations.

We now confront extraordinary challenges: a severe recession here and around the world; a catastrophic loss of trust and confidence in our financial system; unprecedented foreclosure rates; small businesses struggling to stay afloat; millions of Americans worried about losing their jobs and their savings; a deep uncertainty about what tomorrow holds.

At the food bank where my wife and son volunteer, the lines are long and getting longer, and these things are happening across America.

Our test is to act with the strength, speed, and care necessary to get our economy back on track and to restore America's faith in our economic future. This will require action on four fronts.

First, we must act quickly to provide substantial support for economic recovery and to get credit flowing again. The history of financial crises is a history of failures by governments to act with the speed and force commensurate with the severity of the crisis. If our policy response is tentative and incrementalist, if we do not demonstrate by our actions a clear and consistent commitment to do what is necessary to solve the problem, then we risk greater damage to living standards, to the economy's productive potential, and to the fabric of our financial system.

Senators, the ultimate costs of this crisis will be greater if we do not act with sufficient strength now. In a crisis of this magnitude, the most prudent course is the most forceful course.

Now the American Recovery and Reinvestment Plan that is now before the Congress will meet that test. It provides powerful and direct support to help get people back to work; to encourage private investment; to break the cycle currently crippling our economy, a cycle in which concern about growth hurts investment and spending, causes further job losses, and makes it harder for families and businesses to get access to credit. This plan, the American Recovery and Reinvestment Plan, is a critical part of the solution, but it has to be accompanied by aggressive action to address the housing crisis and to get credit flowing again.

Last fall, Congress passed the Emergency Economic Stabilization Act. Your action -- and I know this was a difficult decision for many of you at the time. Your action helped prevent financial catastrophe, and the actions of the Senate last week to authorize additional resources will enable us to take additional steps to reinforce recovery.

President Obama and I believe that this program needs reform. I know there are serious concerns about transparency and accountability, about -- confusion about the goals of the program, and a deep skepticism about whether we are using the taxpayers' money wisely.

We have to reshape and redesign this program to ensure there is credit available to support recovery. We will do this with conditions to protect the taxpayer and the necessary transparency to allow the American people to see how and where their money is being spent. This program -- this financial program -- is absolutely essential to recovery, and we need to make it work.

Second, as we move quickly to get our economy back on track and to repair the financial system, we must make investments that lay the foundation for a stronger economic future. The strength of the recovery will depend critically on the investments and reforms we initiate now to make our economy more productive in the future: the reforms to expand access to health care and reduce its cost, to move towards energy independence, to sharpen and deepen the skills of American workers, and to modernize our infrastructure. These investments will make our economy more productive and more competitive in the future.

Third, our program to restore economic growth has to be accompanied -- and I want to emphasize this -- has to be accompanied by a clear strategy to get us back as quickly as possible to a sustainable fiscal position and to unwind the extraordinary interventions taken to stabilize the financial system. We need to demonstrate with clear and compelling commitments now that, when we have effectively resolved the crisis and recovery is firmly established, that we as a nation will return to living within our means.

Finally, we must move ahead with comprehensive financial reform so that the U.S. economy and the global economy never again face a crisis of this severity.

Senators, in this crisis, our financial system failed to meet its most basic obligations. The system was too fragile and unstable, and because of this, the system was unfair and unjust. Individuals, families, and businesses that were careful and responsible were damaged by the actions of those who were not. So we need to move quickly to build a stronger, more resilient system with much greater protections for consumers and for investors, with much stronger tools to prevent and respond to future crises.

We've experienced a great loss of faith in our economy, but we have not lost the most fundamental of American abilities: the ability to adapt, to change, and to reform. This will take time, it will require action on a scale that we have not seen in generations, and we will have to keep at it until we restore the confidence of Americans and of the world in America's economic leadership.

This is my commitment to you, and this is President Obama's promise to the American people. We are a strong nation with great resources. We can meet these challenges. Our shared goal is a healthy, more stable, and more competitive-free-market economic system that can once again do what it does best: to encourage people to invest and invent, to innovate and create jobs, and to build stronger communities and better lives.

I want to say how grateful I am to my colleagues at the New York Fed and at the Federal Reserve System. Like the career staff of the Treasury, they are an exceptionally talented and dedicated group of public servants. They are brave, creative, and pragmatic, and it has been my great privilege to work with them. Senators, before I finish, I want to address directly the concerns many of you have raised about the mistakes I made in preparing my tax returns. These were careless mistakes. They were avoidable mistakes, but they were unintentional. I should have been more careful. I take full responsibility for them. I have gone back and corrected these errors and paid what I owed. I want to apologize to the committee for putting you in the position of having to spend so much time on these issues when there is so much pressing business before the country.

If you and your colleagues give me the opportunity to serve as secretary of the treasury, then I will do everything I can to justify your trust and your confidence.

Thank you.

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