Geithner Says Economy Entering Sustainable Growth Period

Bloomberg Television:

Transcript after the jump

BLOOMBERG TELEVISION

**HIGHLIGHTS BELOW**

On the jobs report out today:
“It shows we’re getting stronger and the economy’s now creating jobs. I think its created jobs in four of the last five months, and I think it’s a good sign that it’s a good solid report you saw—the private sector across the country again start to add jobs again.

“I think it’s important that we work with Congress still to put in place some additional targeted support for small business, small business credit, help encourage private investment, help state and local governments, you know, keep teachers in the classroom. So we have some more work to do, but I think the economy is definitely getting stronger.”

On when Americans can expect to see unemployment numbers turn around:

“It’s high still because this crisis caused a huge amount of damage, just enormous damage. We haven’t seen it since the Great Depression really. It’s going to take some time for us to heal that damage, for the rate to come down.
“The economy’s now growing. The private sector is now adding jobs. You’re seeing hours increase. That’s going to generate more income for Americans. And that’ll help improve confidence and that’ll help strengthen the economy itself.”
“I think we’ve made a lot of progress. We’ve got some work to do still. It’s going to take some time to heal the damage, but I think the economy’s getting better.”

On Republicans’ argument that the U.S. is not in a self-sustaining recovery:

“That’s just a political argument. I mean, again, remember where we were a year ago when we had three-quarters of a million Americans losing their jobs every month. The economy was shrinking at a six percent annual rate. We’ve got an economy now that’s been growing at a significant rate now for three quarters, and again, for the first time we’re seeing the private sector start to create jobs on a significant scale.”

“That would not have happened without the actions the president took. Forceful, difficult, complicated and in some ways unpopular actions he took to fix the mess he inherited and put out that financial fire.”

“Put a floor under the economy and start to restore confidence among consumers and businesses…You’re seeing investment expand, exports expand, manufacturing coming back, hours increasing. These are good signs.”

“Now, again, it is a very tough economy still. It’s very hard out there because this crisis caused so much damage and I think that’s why it’s important that we keep working with the Congress to put additional support in the economy where it’s needed.”

On the Fed ending its mortgage-backed security purchase program:

“I will never comment on the actions of the Fed because we have an independent Fed and I’m going to respect their independence and judgment. But the Fed has been very successful, the administration’s been very successful and have brought strategy to, again, restore some stability to the financial system.”

“The financial system is in a much stronger position today than it was three months ago, six months ago, nine months, a year ago because we acted so forcefully to put private capital back into the banking system and try to heal what was broken.”

“We’re going to keep working to make sure that, again, we’re keeping mortgage interest rates low for all Americans and help reinforce the modest signs of improvement we’re starting to see in the housing markets.”

On whether there will be a double dip in housing:

“This crisis caused a lot of damage and you still see a substantial damage in housing markets. A lot of people still facing risk of foreclosure, but we’re making some progress in helping reduce that risk.”

“The program we put in place has not just brought down mortgage interest rates across the country, help stabilize house prices across much of the country, but a million Americans now are benefiting from an average of $600 a month in lower monthly payments on their mortgage debt.”

“That’s a substantial amount of money in the hands of the American people. It’s very important, very powerful, and we’ve announced a series of actions over the last couple of weeks to try to make sure that program’s reaching more Americans.”

On whether Fannie and Freddie can pick up the slack in the marketplace if the Fed steps back:

“Because there’s so much damage to the private banking system, Fannie and Freddie are playing a necessarily unavoidably much larger role in housing finance now. Over time as the financial system heals and recovers they’ll go back to a more normal role and the role of the private sector will expand.”

On the Treasury Department’s annual currency report due April 15th:

“It’s very important that China move. I’m quite confident they will decide it’s in their interest to move. We’re going to try to make sure we’re going to maximize the chance that they move quickly, and we’re going to continue to make sure we’re talking about the broad range of economic issues we face with China.”

“We’re going to use the G20 process for that because this is an issue that matters to all countries, not just the United States. And again, but our strategy’s going to be designed to increase that as China does decide to do what’s in their own interest, which is to start to let their currency start to move up again. And that’ll be part of making sure we have a more healthy global recovery in place.”

“We’ve got a very strong relationship with China. We have a huge national security interest with China, common interests not just in Iran but in North Korea and around the world.”

“We have a very strong economic relationship. The U.S. exports to China are actually growing quite rapidly and what we want to do is make sure that China is growing. They’re buying more from America. More of their growth comes from domestic consumption less from exports, and that U.S. firms are able to compete on a level playing field in China. That’s going to guide our interest with China as China understand and China expects.”

On why Geithner is heading to India next week:

“You should just view this as a sign of the president’s recognition that our fate as a country, our strength as a country, is tied to how well the largest countries in the world do over time.”

“We want to build stronger relationships in the economic side because we think that’s going to be good for American business, good for American exports, good for American jobs. And India’s a very large, very rapidly growing country and we expect it to be a bigger source of opportunity for American business in the future.”

On whether bi-partisan financial regulatory reform legislation will move forward:

“We’re very close I believe. And the two key issues that guide the reform proposal are to make sure we have strong protections in place for consumers. That’s not a Democratic or Republican thing. It’s hard for anyone to be against that.”

“We want to make sure that’s done with sufficient strength and independence that’s really going to work in the future to protect people from the kind of predation and abuse they saw across the country so damaging.”

“The second is to make sure that, if we’d have financial crises in the future that cost 8 million Americans their jobs that we want to make sure that we’re constraining risk taking. That if large banks in the future get themselves to the edge of the cliff, they can’t manage without the government, that we’re going to be able to dismember, put them out of their misery safely without the taxpayer bearing any of the cost of that basic crisis.”

“Those are the two things that are at stake. We’re very close on the substance and I think that if you listen carefully you see Republicans moving our way on this because I think again it’s very hard given the damage caused by this crisis for anybody to stand up and say we don’t need strong protection for consumers. And we don’t need to limit risk taking in the financial sector.”

On where he and the President are on consumer protection:

“We like the substance of our proposals. We’ve very confident they provide a mix of strength, protect people better, but still allow for innovation and change in the financial world over time. And again, I think there’s been a huge amount of convergence, and I think they’re moving our way, even on things like the importance of an independent consumer protection agency.”

“The key test is we proposed standalone. The key test is whether it has independent authority to set rules and enforce them across the system from banks to payday lenders. That’s the key test for us of a strong bill.”

His thoughts on risk and size of banks:

“The key question is to make them less risky. As you saw in this crisis you saw relatively small institutions bring the entire financial system to the edge of collapse. So if you don’t constrain the risks they take, limit the amount of risk they take then you won’t have solved the problem you want to prevent in future crises. That’s the key thing that that’s the key test of any credible reform plan.”

“I think that you want to make sure you’re doing this not just for banks. You want to make sure you do it for investment banks, for other entities that are doing essentially the same things that banks are doing. That’s the important thing.”

On whether banks have been unfairly demonized:

“The people who led our nation’s banks made a bunch of judgments that caused a catastrophic loss of trust and confidence in our financial system, and did really bring our system to the edge of collapse, force the government of the United States to step in and do deeply offensive unacceptable things to protect the economy from the mistakes they made.”

“It is going to take a long time for them to earn back the trust and confidence of their customers and of the American people. And but we’re going to make sure we design a system that is more robust to the risk they take – they make mistakes in the future. We’re going to design a system that doesn’t depend on them making better judgments in the future. We’re going to constrain the choices they make.”

Responding to criticism about his performance as Treasury Secretary:

“I have a difficult, important, complicated job. I get advice from people all the time, all walks of life, and I’m going to keep doing what I can do to help the president fix what’s broken and make this economy work better for all Americans.”

“We’ve made a lot of progress because he was willing to make some difficult, tough choices. They’re unpopular choices. You act it generates controversy. People are not going to agree with everything that we do, but the test you should hold me to and hold the president to is are we doing things that are making things better? And we’ve got a lot of work to do but we’ve made a lot of progress.”

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