Geithner Takes Plan To Global Leaders
Sunday, February 15, 2009
ROME, Feb. 14 -- Treasury Secretary Timothy F. Geithner laid out the Obama administration's financial rescue program for his international counterparts Saturday in an effort to rally a vigorous global response to the worsening crisis and reassured the world's leading economies that the U.S. plan is more developed than the outline he unveiled publicly last week, officials said.
Senior finance officials from the world's leading nations spent much of a six-hour meeting discussing how to deal with the problem at the heart of the financial crisis: the toxic assets backed by failing loans that are clogging banks' books, according to two senior officials at the meeting, which was closed to the news media.
Geithner is considering a strategy using public and private funds to tailor solutions for specific banks, the officials said. In one case, government guarantees would be provided to protect a bank from future losses caused by the toxic assets. In another case, the government would buy the assets outright from a bank.
Speaking from a few pages of notes that he had quickly scribbled in a small notebook, Geithner laid out for finance ministers the thinking behind the $787 billion economic stimulus and the U.S. financial rescue, which could contain more than $2 trillion in public and private spending. The initiatives, Geithner told the officials, were designed to be massive enough to address the depth of the U.S. crisis and last long enough to stimulate the economy for the duration of the recession.
Geithner did not press other nations to adopt the same approach, officials said. But in describing the U.S. response, he delivered clear messages: Be realistic about the trouble facing your economy. Develop rescue initiatives sooner rather than later. And make them big enough to meet the challenges ahead.
"You've seen the new administration in the U.S. move with unprecedented speed, not just to work with the Congress to authorize new resources to help strengthen the financial system, but to move very, very quickly to put in place this very powerful economic recovery plan," he told reporters after the meeting. "What's important now is you hear around the world a much greater sense of urgency and commitment . . . We all recognize that the power of what we do individually will be much more effective if we move together."
Geithner's message was well received at the talks, known as the G-7, which gather the United States, Canada, Japan, and four major nations from Europe. Russia and world financial organizations also attended.
Going into the meeting, Canadian Finance Minister James M. Flaherty called the U.S. financial rescue "less than clear," echoing comments made by financial chiefs in France and Germany. Afterward, many of the officials appeared reassured, saying that Geithner provided clear answers to their questions.
Several officials said Geithner was particularly helpful in explaining how the various elements of the administration's initiatives tie together as well as how he plans to combine public funds with private resources to get more bang out of every rescue dollar the governments spends.
"What Tim Geithner wanted to do is set out the framework in which he's operating," Britain's Chancellor Alistair Darling said in an interview. "But he's made it very clear that he sees the urgency of this." Darling told a group of reporters: "It's quite clear that the new American administration is getting into its stride, it wants to make a real difference not just for Americans but for the wider world."
Such reactions provided Geithner with a small triumph after a tumultuous first three weeks in office. During his confirmation hearings, he faced questions about his history of delinquent taxes and then was widely criticized for being vague when he unveiled his rescue plan for the financial system Tuesday.
In hindsight Geithner could have managed expectations so that the public would have known beforehand that the Treasury Department was going to unveil only broad outlines of the plan, a source familiar with the matter said. On Tuesday, the stock markets plummeted minutes after Geithner began speaking.