Europe Must Follow Through on Rescue: Geithner
The US recovery will continue, despite financial turmoil in Europe, as long the governments on the continent follow through on their promised rescue package, Treasury Secretary Tim Geithner told CNBC Thursday.
He added the US recovery is "moderate, but pretty solid."
“I think they're [the euro-zone countries are] demonstrating that they have the ability to solve this, and they've certainly got the political will to do it,” said Geithner. “But, they have just got to demonstrate that over time.”
Geithner added that Europe is showing stronger underlying momentum and growth than many people expected. “The world economy does really look like it's gradually getting stronger, that's certainly true for the United States,” he added.
Geithner also said he thought people were correct in assessing that Fannie Mae and Freddie Mac needed reform. He said the administration will deal with those changes once the first stages of financial reform are in place.
“We're going to be able to deliver that [reform]," he said, "because you see broad support among both Republicans and Democrats for the recognition that we've got to change that basic system of housing finance.”
He spoke to CNBC from Alaska, en route to Asia for a G-20 economic summit in Busan, South Korea, this weekend.
Geithner acknowledged that the jobs recovery had turned the corner, but noted that some Americans are still hurting. Given the severity of the recession, Geithner said, it will take a while for the public to regain confidence and for the economy to heal completely.
“It [the improving jobs picture] is being translated into longer hours worked and more job creation,” he added.
Geithner denied the Obama administration is anti-business, a sentiment being floated on Wall Street, in light of new financial regulations.
He said the administration believes businesses must have the tools to innovate and that it recognizes the private sector must lead the recovery. At the same time, he said, the needs of the average Americans are a priority.
“We are committed to making sure that government meets the needs of Main Street,” said Geithner.
On global financial reform, the secretary said of paramount importance is that countries reach a consensus on standards of transparency in the markets, for instance, and other measures, and recommit to them.
Also key, he said, is a framework that strikes the right balance between protecting businesses and consumers and preserving business's capacity for innovation, so that financial markets can do a better job of serving the economy.
“We’re working very closely with Europe and the other financial centers to try to make sure we have strong standards for transparency and disclosure across these markets,” he added.
“Markets work better, when they’re not operating in the dark. Markets work better when investors have the capacity to better assess risk in these institutions.”