President Obama’s Treasury Secretary-designate Tim Geithner called for aggressive action in tackling the economic downturn during his testimony before the Senate Finance Committee at his confirmation hearing Wednesday morning. “Senators, the ultimate costs of this crisis will be greater, if we don not act with sufficient strength now,” Geithner’s testimony read. “In a crisis of this magnitude, the most prudent course is the most forceful course.” Geithner, currently president of the Federal Reserve Bank of New York, called for the support of Obama’s proposed stimulus plan — which he said the President is expected to present in the next few weeks. “[W]e must act quickly to provide substantial support for economic recovery and to get credit flowing again,” Geithner said. In his testimony, the Treasury Secretary-designate vowed to restructure the $700 billion rescue plan enacted by Congress in October, saying a revised TARP plan must contain “tough conditions to protect the taxpayer and transparency to allow the American people to see how and where their money is being spent and the results those investments are delivering.” Geithner said he would get to work on an exit plan, a way to wind down as soon as possible the government’s now-tireless efforts to prop up financial markets. He also promised to develop a fiscal plan that offers long-term stability. Geithner didn’t offer too many details as to how he would accomplish the plans he outlined, suggesting that jumping-the-gun — a tendency of many legislators in the recent past — wasn’t the way to go. In considering whether to confirm Geithner as the nation’s top financial officer, the Senate panel will question Geithner about his plans to rebuild financial markets. But the panel is also expected to smooth over concerns that surfaced last week — which ultimately delayed Geithner’s hearing. His original confirmation hearing, set for last week, hit a roadblock after reports found he failed to pay more than $34,000 in taxes for social security and medicare during his time as a senior official at the International Monetary Fund from 2001-2003, including a small payment in 2004 after he left. “These were careless mistakes. They were avoidable mistakes,” Geithner said Wednesday. “But they were unintentional…I take full responsibility for them. I have gone back and corrected these errors and paid what I owed…I want to apologize…” Considering Geithner would oversee the IRS, many have questioned the mistake. Ranking member of the Finance Committee, Sen. Chuck Grassley (R-Iowa), said he was weighing the risks tied to the problems in the economy against what he called the “troubling fact” that Geithner didn’t pay a portion of his back taxes in a timely fashion, according to a CNNMoney.com report. Committee chairman Max Baucus (D-Mont), however, said in his opening statement that he’s confident Geithner is up to the “formidable challenges” the economy faces. “I’m interested in hearing his explanation for the tax stuff, but that’s minor next to the other issues,” New York University finance professor Roy Smith told CNNMoney. “What I want to know is what he’s learned from the first half of the TARP.” Write to Kelly Curran at firstname.lastname@example.org Disclosure: The authors held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.
Geithner Testifies: Calls for Tougher Bailout Terms
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