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FIRST ON CNBC INTERVIEW: CNBC TRANSCRIPT: NBC'S BRIAN WILLIAMS & CNBC'S STEVE LIESMAN SPEAK WITH TREASURY SECRETARY TIMOTHY GEITHNER IN HIS FIRST TELEVISION INTERVIEW SINCE BECOMING TREASURY SECRETARY TODAY, TUESDAY, FEBRUARY 10TH ON CNBC'S "POWER LUNCH" A

Treasury Secretary Timothy Geithner
AP
Treasury Secretary Timothy Geithner

WHEN: Today, Tuesday, February 10th at 12PM ET

WHERE: CNBC's "Power Lunch"

Following is the unofficial transcript of a FIRST ON CNBC interview with Treasury Secretary Timothy Geithner today on CNBC's "Power Lunch."

All references must source CNBC.

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BRIAN WILLIAMS: BILL, THANK YOU. WE ARE IN THE DIPLOMATIC ROOM AT THE TREASURY DEPARTMENT. I'M JOINED BY SECRETARY GEITHNER. MR. SECRETARY, THANK YOU. AS YOU ENTERED THE ROOM, THE LIVE COVERAGE ON CNBC CARRIED THE GRAPHIC, IS GEITHNER'S NECK ON THE LINE? I HEARD LARRY KUDLOW SAY, GEITHNER WAS REALLY KIND OF A DISASTER. MR. SECRETARY, THAT WAS AMONG THE NICER COMMENTS I JUST HEARD FROM LARRY KUDLOW. WHAT DO YOU HAVE TO SAY FOR THIS PLAN YOU JUST UNVEILED? MARKET IS DOWN 285 AND CHANGE, NOT A RINGING ENDORSEMENT.

TIM GEITHNER: BRIAN, THIS IS AN ENORMOUSLY COMPLICATED FINANCIAL CRISIS WE'RE FACING. IT'S GOING TO TAKE A LOT OF TIME TO RESOLVE. IT'S GOING TO BE HARD TO DO, BUT WE'RE GOING TO KEEP AT IT UNTIL WE FIX IT. WHAT'S REALLY IMPORTANT IS WE MOVE ALONGSIDE THE ECONOMIC RECOVERY AND REINVESTMENT PLAN TO BRING A NEW PROGRAM THAT PROVIDES DIRECT SUPPORT TO HELP PREPARE THE FINANCIAL SYSTEM AND GET CREDIT FLOWING AGAIN TO SMALL BUSINESSES AND TO CONSUMERS. THAT'S THE MOST IMPORTANT THING WE CAN DO. WE'VE GOT TO DO IT TOGETHER. AS WE MOVE TO HELP ADDRESS THIS COMPREHENSIVE HOUSING CRISIS, TOO. THE PROGRAMS WE HAVE SEEN SO FAR HAVE BEEN TOO LIMITED, TOO LATE. THEY'VE COME WITH TOO LITTLE TRUST AND TRANSPARENCY. THEY HAVE BEEN TOO TENTATIVE AND THEY PROVIDED TOO LITTLE DIRECT SUPPORT TO SOME OF THE PEOPLE WHO HAVE BEEN MOST DIRECTLY AFFECTED BY THIS CRISIS. WE WILL TRY TO CHANGE THAT BY RESTORING CONFIDENCE THAT WHAT WE DO IS GOING TO BE GUIDED BY WHAT'S IN THE BROAD PUBLIC INTEREST WITH A COMPREHENSIVE PROGRAM OF FINANCIAL SUPPORT MOVING ON ALL FRONTS TOGETHER AT ONCE. WITH THE KIND OF STRONG CONDITIONS WE NEED TO HELP GIVE THE TAXPAYERS OF THIS COUNTRY CONFIDENCE THAT THEIR MONEY IS GOING TO BE USED WISELY, WITH THE KIND OF TRANSPARENCY AND ACCOUNTABILITY THAT WILL AGAIN HELP RESTORE SOME CONFIDENCE IN THE BROAD RECOVERY PLAN.

WILLIAMS: CHARLIE GASPARINO WAS ON THE PLAN SAYING AT FIRST THE GUIDANCE WAS THIS ISN'T GOING TO BE A BAD BANK. EVERYONE CHEERED THAT. IT'S GOING TO BE AN AGGREGATOR BANK, BUT HE SAID OF WHAT YOU ANNOUNCED THIS MORNING, IT'S NOT QUITE AN AGGREGATOR BANK EITHER. WHAT IS IT?

GEITHNER: LET ME SAY WHAT WE'RE TRYING TO ACHIEVE. WHAT WE WANT TO DO IS FIND A WAY TO PROVIDE GOVERNMENT FINANCING ALONGSIDE PRIVATE CAPITAL TO HELP GET THESE MARKETS WORKING AGAIN. THIS THING IS VERY HARD TO GET RIGHT, AND WHAT WE WANT TO AVOID DOING IS A PROGRAM THAT'S GOING TO LEAVE THE GOVERNMENT VULNERABLE TO THE CHARGE THAT WE'RE GOING TO OVERPAY FOR A BUNCH OF THESE BAD ASSETS AND PROVIDE A DISGUISED SUBSIDY TO THE FINANCIAL SYSTEM. THAT'S SOMETHING I AM NOT PREPARED TO DO. PUBLICS FINANCIAL ASSISTANT CANNOT SOLVE THIS FINANCIAL CRISIS ALONE. SO WHAT IS VERY IMPORTANT WE DO, IS AGAIN TO TRY TO DO THINGS THAT HELP BRING PRIVATE CAPITAL IN AND THAT WILL HELP SOLVE THIS ENORMOUSLY COMPLICATED PROBLEM AND TRY TO FIGURE OUT HOW TO GET THE VALUE OF THESE THINGS RIGHT. IF WE PROVIDE SUBSTANTIAL FINANCING, WHICH IS SOMETHING ONLY THE GOVERNMENT CAN DO NOW, WE CAN HELP DO THIS IN A WAY THAT'S GOING TO HELP PROTECT THE TAXPAYER AND PROVIDE MAXIMUM BENEFIT IN GETTING THESE MARKETS WORKING AGAIN. BUT, BRIAN, THIS IS IS A VERY COMPLICATED CHALLENGING PROBLEM.

WILLIAMS: TAXPAYERS WOULD LIKE TO KNOW IF IT CAN BE PUT SIMPLY HOW BAD IS THIS?

GEITHNER: BRIAN, WE HAVE PARTS OF OUR SYSTEM ARE VERY STRONG AND FUNCTIONING WELL. WE HAVE BANKS THAT ARE GROWING AND EXPANDING AND INCREASING LENDING. YOU'RE SEEING SOME THAWING IN THE CREDIT MARKETS SO COMPANIES ARE STARTING TO BE ABLE TO BORROW AGAIN. WE HAVE SEEN INTEREST RATES START TO COME DOWN ACROSS THE COUNTRY AND AROUND THE WORLD. BUT PARTS OF OUR SYSTEM ARE STILL VERY BADLY DAMAGED, AND OUR JUDGMENT IS, I THINK THE PRESIDENT'S JUDGMENT, CERTAINLY MY JUDGMENT, THAT WE'RE GOING TO HAVE DO SUBSTANTIALLY MORE TO MAKE RECOVERY WORK. AND, AS I SAID EARLIER TODAY, THE FINANCIAL SYSTEM IS NOW WORKING AGAINST RECOVERY. WE NEED TO MAKE IT WORK WITH RECOVERY OR THE EFFECTS WILL BE MORE LIMITED AND THE ULTIMATE COST OF THIS THING TO THE TAXPAYER WILL BE GREATER AND THE DAMAGE TO AMERICAN BUSINESS WILL BE MORE DAMAGING.

WILLIAMS: DOES IT BOTHER YOU THAT BY THE TIME I SAW IN THE HALLWAY OUTSIDE THIS ROOM YOU WERE STILL COMING FROM THE SPEECH, THE DOW WAS TANKING IN THE NEIGHBORHOOD OF 300 POINTS?

GEITHNER: AS I SAID, THIS IS -- I THINK PEOPLE UNDERSTAND THIS, CERTAINLY THE MARKETS UNDERSTAND THIS, THAT THIS IS AN ACUTE AND SEVERE AND COMPLICATED FINANCIAL CRISIS, AND WHAT WE NEED TO DO IS TO BE HONEST AND OPEN WITH PEOPLE ABOUT HOW HARD THIS IS GOING TO BE AND TO BE HONEST AND DIRECT THAT IT'S GOING TO COST RESOURCES AND IT'S GOING TO REQUIRE THE GOVERNMENT TAKING RISKS THAT THE MARKET CANNOT TAKE. BUT THAT'S WHAT GOVERNMENTS EXIST TO DO. THESE THINGS WILL NOT BURN THEMSELVES OUT. THE ONLY WAY FORWARD IS FOR US TO TRY TO MOVE AS COMPREHENSIVELY AS WE CAN TO AGAIN TRY TO GET CREDIT FLOWING AGAIN.

WILLIAMS: DOES IT BOTHER YOU THAT FRANK RICH, IN "THE NEW YORK TIMES" ON SUNDAY, CALLED YOU AN ALUMNI OF THE FINANCIAL BUBBLE'S INSIDERS CLUB. SOME OF IT IS GETTING PERSONAL ABOUT YOU, MR. SECRETARY.

GEITHNER: BRIAN, I HAVE SPENT MY LIFE WORKING IN THE PUBLIC INSTITUTIONS THAT ARE RESPONSIBLE FOR OUR NATION'S ECONOMIC POLICY. I HAVE ALMOST NEVER DONE ANYTHING ELSE EXCEPT WHEN I WAS TRYING TO WORK MY WAY THROUGH COLLEGE AND GRADUATE SCHOOL. MY ENTIRE LIFE I HAVE BEEN WORKING IN TRYING TO IMPROVE BASIC QUALITY OF ECONOMIC POLICY FOR OUR COUNTRY. I HAVE WORKED WITH SOME INCREDIBLY TALENTED PEOPLE. IT'S BEEN A GREAT PRIVILEGE TO DO THAT, AND I FEEL A HUGE PERSONAL RESPONSIBILITY TO TRY TO DO EVERYTHING WE CAN TO TRY TO RESTORE CONFIDENCE AROUND THE WORLD IN THE QUALITY OF LEADERSHIP OVER OUR FINANCIAL SYSTEM AND OUR ECONOMY. I KNOW THE PRESIDENT BELIEVES THAT DEEPLY, AND IT IS A GREAT HONOR FOR ME TO BE ABLE TO WORK WITH HIM AND HIS COLLEAGUES IN THIS ADMINISTRATION IN THAT INCREDIBLY IMPORTANT TASK.

WILLIAMS: GIVEN THE SHAPE WE'RE IN IN SO MANY AREAS ACROSS THE BOARD, THE TAXPAYERS WOULD PROBABLY LIKE TO KNOW ARE YOU GOING TO NEED MORE FROM US? AND HOW MUCH, AND WHEN ARE YOU GOING TO ASK?

GEITHNER: BRIAN, I WANT TO SAY THIS THIS WAY. THE LESSON OF THIS CRISIS HERE IN THIS COUNTRY AND I THINK IT'S TRUE OF THE LESSON OF FINANCIAL CRISES AROUND THE WORLD, IS THAT GOVERNMENTS TEND TO UNDERESTIMATE THE ULTIMATE COST AND DAMAGE. THEY TEND TO MOVE TOO LATE TO TRY TO ADDRESS THE CRISIS AND THAT MAKES THE CRISES WORSE, MORE EXPENSIVE, AND MORE DAMAGING. OUR JUDGMENT IS THAT IT WILL BE CHEAPER OVER THE LONGER TERM, IT WILL COST THE TAXPAYER LESS OVER THE LONGER TERM, AND WE'LL SEE LESS DAMAGE TO AMERICAN BUSINESS IF WE'RE MORE FORCEFUL UP FRONT IN TRYING TO PUT ENOUGH FORCE BEHIND THIS TO HELP TO GET IT TO WORK.THE CONGRESS HAS GIVEN US SUBSTANTIAL RESOURCES. WE'RE GOING TO USE THOSE RESOURCES AS QUICKLY AND EFFECTIVELY AND CAREFULLY AS POSSIBLE. WE WILL TRY TO STRETCH THEM AS LONG AS THEY CAN GO BY BEING AS CREATIVE AS WE CAN TO TRY TO BRING IN PRIVATE CAPITAL, BUT WHAT'S IMPORTANT IS WE ARE GOING TO CONSULT WITH THE CONGRESS CAREFULLY TO TRY TO MAKE SURE THAT THE WORLD UNDERSTANDS THAT THE RESOURCES NECESSARY TO SOLVE THIS WILL BE AVAILABLE OVER TIME. AND AGAIN, JUST ONE MORE THING ON THIS IF YOU LOOK BACK AT CRISES THAT WERE HANDLED WELL AND SOLVED WELL, THEY WERE NOT SOLVED IN A FEW WEEKS OR A FEW MONTHS, EVEN IN THE FIRST YEAR OF AUTHORIZATION BY GOVERNMENTS THEY TOOK TIME TO RESOLVE AND WE NEED TO BE REALISTIC AND OPEN, BUT THE IMPORTANT IS THAT AGAIN THAT WE SEND A BASIC SIGNAL WORKING WITH THE CONGRESS THAT WE WILL DO WHAT'S NECESSARY TO FIX THIS.

WILLIAMS: LET ME READ YOU SOME QUOTES ABOUT OUR SYSTEM. FROM HARVARD, MOST OF THE BIG BANKS NEED TO BE PUT IN SOME FORM OF BANKRUPTCY AND RECAPITALIZE RECAPITALIZED. AND I THINK EVERYBODY UNDERSTANDS THAT. THIS NEXT ONE, THE GOVERNMENT SHOULD ALLOW EVERY DISTRESSED BANK TO GO BANKRUPT, SET UP A FRESH BANKING SYSTEM UNDER TEMPORARY STATE CONTROL RATHER THAN CRIPPLE THE COUNTRY BY PROPPING UP A CORRUPT EDIFICE. IS OUR BANKING SYSTEM BROKEN, BANKRUPT, A CORRUPT EDIFICE?

GEITHNER: NO, I THINK, AS I SAID EARLIER, PARTS OF OUR SYSTEM ARE VERY STRONG. MANY BANKS WERE NOT PART OF THE PROBLEM, AND THEY'RE GOING TO BE PART OF THE SOLUTION. WE HAVE THIS ENORMOUSLY DIVERSE COUNTRY WITH 8,000 FINANCIAL INSTITUTIONS IN VERY DIFFERENT CIRCUMSTANCES. VERY IMPORTANT WE NOT TAR THEM ALL WITH THE SAME BRUSH. SOME OF THEM WERE WELL-MANAGED. SOME OF THEM WERE LESS WELL-MANAGED. OUR APPROACH IS GOING TO TRY TO DIFFERENTIATE AMONG THEM. TO TRY MAKE SURE WE ARE GIVING ASSISTANCE TO THOSE THAT NEED IT AND USING AGAIN THAT TAXPAYERS MONEY AS WISELY AS WE CAN TO HELP FACILITATE THIS ADJUSTMENT PROCESS. MAKE SURE THIS HAPPENS WITH THE LEAST RISK TO THE OVERALL ECONOMY AS A WHOLE.

WILLIAMS: HOW IS IT THAT WHERE THE BANKS ARE CONCERNED WE REALLY DON'T KNOW HOW MUCH WAS LOST AND WHERE YET?

GEITHNER: IT'S THE CORE OF THE PROBLEM, BUT THE UNCERTAINTY THAT'S AT THE HEART OF THAT CONCERN HAS MANY DIFFERENT SOURCES. ONE IS JUST A DEEP UNCERTAINTY AGAIN ABOUT HOW DEEP AND LONG THE RECESSION WILL BE. IT'S ALSO RELATED TO WHAT THE ULTIMATE LOSSES MAY BE ON A SET OF ASSETS IN A CRISIS THAT HAS NO PRECEDENT. WE HAVEN'T SEEN. BUT ANOTHER SOURCE OF THE BASIC UNCERTAINTY OUT THERE IS THESE MARKETS ARE NOT WORKING BECAUSE THERE'S NO FINANCING AVAILABLE AND THOSE THREE THINGS TOGETHER MAKE IT VERY HARD TO ULTIMATELY DECIDE, AND FOR THE MARKET TO DECIDE, WHAT THE ULTIMATE LOSSES ARE GOING TO BE AND WHERE THEY'RE GOING TO END UP ACROSS THE SYSTEM. BUT IF WE MOVE TO DO AN AGGRESSIVE PROGRAM OF RECOVERY, WE MOVE ON THE HOUSING FRONT TO HELP ADDRESS THE HOUSING CRISIS, AND IF WE TAKE AGGRESSIVE ACTION TO HELP RESTORE THE FLOW OF CREDIT IN THE FINANCIAL SYSTEM BY PROVIDING SUBSTANTIAL FINANCING TO THE MARKETS THAT LEVERAGE PRIVATE CAPITAL, THEN WE'LL HELP REDUCE THAT SOURCE OF UNCERTAINTY AND THAT WILL ALLOW THE MARKETS TO START GRADUALLY BEGIN FUNCTIONING AGAIN.

WILLIAMS: LET'S TALK ABOUT A WORLD YOU ARE VERY FAMILIAR WITH AND THAT'S WALL STREET. SHOULD THE SYSTEM OF COMPENSATION, I.E., WALL STREET BONUSES THAT HAVE BEEN EVERYONE'S FAVORITE TARGET AND UNDER FIRE SO MUCH OF LATE, SHOULD THAT CHANGE?

GEITHNER: ABSOLUTELY. AND IT'S GOING TO HAVE TO CHANGE. WE'RE FOCUSED NOT JUST ON TRYING TO MAKE SURE THE CONDITIONS CONGRESS PASSED ARE BEING MET AND ENFORCED, BUT WE'VE SET OUT NEW CONDITIONS THAT WOULD APPLY TO NEW FORMS OF ASSISTANCE TO THEY SYSTEM, BUT AS IMPORTANT AS THAT, WE NEED TO TRY TO TRANSFORM THE OVERALL SYSTEM OF INCENTIVES AROUND THE FINANCIAL SYSTEM BECAUSE THOSE INCENTIVES WERE PART OF WHAT CAUSED THIS CRISIS, AND WE NEED TO MAKE SURE THAT REWARDS ARE MORE TAILORED TO THE RISKS BEING TAKEN AND THAT BOARDS OF DIRECTORS DO A BETTER JOB OF PUTTING LIMITS AND CONSTRAINTS ON RISK-TAKING AS A COMPLEMENT TO THOSE BROAD REFORMS TO COMPENSATION. WE'RE GOING TO INITIATE A PROCESS TO TRY TO BRING A NEW SET OF GUIDELINES AND FRAMEWORK TO MAKE SURE WE BRING ABOUT THOSE BROADER FORMS. BUT YOU'RE ABSOLUTELY RIGHT THIS HAS TO CHANGE.

WILLIAMS: MR. SECRETARY, WE'RE GOING TO ASK YOU TO STAY HERE.THIS VACANT SEAT NEXT TO ME IS GOING TO BE FILLED BY CNBC'S STEVE LIESMAN. AFTER WE COME BACK FROM A SHORT BREAK, THE QUESTIONING CONTINUES DURING OUR LIVE INTERVIEW WITH THE MAN OF THE HOUR, THE MAN OF THIS DAY CERTAINLY IN TERMS OF OUR NEWS, SECRETARY OF THE TREASURY TIM GEITHNER. WE'LL CONTINUE FROM WASHINGTON RIGHT AFTER THIS.

WILLIAMS: WE ARE BACK LIVE HERE ON CNBC FROM THE DEPARTMENT OF THE TREASURY IN WASHINGTON. ADJACENT TO THE WHITE HOUSE. OUR GUEST, SECRETARY OF THE TREASURY TIM GEITHNER, WHO HAS BEEN KIND ENOUGH TO JOIN US AFTER HIS SPEECH TODAY ON WHAT'S BEEN CALLED THE BANK RESCUE OR BAILOUT PLAN. AS YOU CAN SEE, I'M JOINED BY CNBC'S STEVE LIESMAN. BEFORE I HAND OVER THE QUESTIONING TO MY COLLEAGUE, MR.SECRETARY, ONE QUESTION TO BEGIN THIS SECOND SEGMENT HAS TO DO WITH YOU. WE WERE JOKING AS YOU WALKED INTO THE ROOM, THE GRAPHIC ON THE SCREEN ON CNBC WAS IS GEITHNER'S NECK ON THE LINE.IT'S GOTTEN AWFULLY PERSONAL HERE. AS YOU KNOW, AT LEAST ONE COLUMNIST CALLED YOUR GETTING THIS JOB THE ADMINISTRATION'S MULLIGAN. I HAD A DEMOCRAT -- SENIOR DEMOCRAT IN WASHINGTON SAY TO ME, GEITHNER GOT IN UNDER THE WIRE. DASCHLE WAS NOT SO FORTUNATE. HAS THIS BEEN MORE PERSONAL THAN YOU THOUGHT, AND HAS YOUR OWN TAX TROUBLE UNDERMINED AT ALL THE JOB YOU'RE TRYING TO DO?

GEITHNER: BRIAN, I SCREWED UP, BUT MY FOCUS IS ON HELPING THIS PRESIDENT SOLVE THIS COUNTRY'S PROBLEMS, AND EVERYTHING I DO IS GOING TO BE MOTIVATED BY HELPING HIM DO THE EXTRAORDINARY THINGS WE'RE GOING TO NEED TO DO TO GET THIS ECONOMY BACK ON TRACK.

WILLIAMS: STEVE?

LIESMAN: MR. SECRETARY, THERE WAS AN EXPECTATION I THINK COMING INTO TODAY'S ANNOUNCEMENT THAT YOU HAD FIGURED A LOT OF STUFF OUT, AND THEN WE'RE STRUCK BY LINES IN YOUR SPEECH WHEN IT COMES TO THIS PUBLIC/PRIVATE PARTNERSHIP, WE'RE EXPLORING A RANGE OF DIFFERENT STRUCTURES. IT SUGGESTS THAT THE TREASURY ISN'T FIGURED THESE THINGS OUT YET AND THAT YOU HAVEN'T DECIDED ABOUT THE HARD CHOICES THAT HAVE TO BE MADE ABOUT HOW TO VALUE THE ASSETS.HAVE YOU MADE THOSE CHOICES YET?

GEITHNER: STEVE, WE'RE GOING TO BE VERY CAREFUL TO GET THIS RIGHT, AND WE'RE NOT GOING TO PUT OUT DETAILS THIS WILL WE ARE CONFIDENT THAT WE'VE GOT THE RIGHT STRUCTURE THAT'S GOING TO ACHIEVE THE OBJECTIVES TO TRY TO BRING PRIVATE CAPITAL IN ALONGSIDE GOVERNMENT FINANCING TO GET THE MARKETS WORKING AGAIN. AS YOU KNOW, THIS IS ENORMOUSLY COMPLICATED.THERE ARE A MILLION IDEAS HOW BEST TO DO THIS. BUT WHAT WE'VE GOT DO HERE IS MAKE SURE WE'RE BEING EXCEPTIONALLY CAREFUL THAT THE TAXPAYER IS BEING PROTECTED, THAT WE'RE TAKING RISKS WE UNDERSTAND, AND THAT WE'RE USING THESE RESOURCES IN A WAY THAT'S GOING TO GIVE THE MAXIMUM BENEFIT IN GETTING THESE MARKETS GOING AGAIN, AND WE'RE GOING TO CONSULT WIDELY, BE VERY OPEN TO SUGGESTIONS. THERE ARE LOTS OF DIFFERENT IDEAS OUT THERE, BUT THIS BASIC STRUCTURE, WHICH WILL LEVERAGE PRIVATE CAPITAL WITH GOVERNMENT FINANCING WE BELIEVE OFFERS THE BEST PROSPECT TO ACHIEVE THIS BASIC ATTEMPT TO GET THE MARKETS WORKING AGAIN WITH THE LEAST RISK TO THE TAX PAYER NOT HAVING THE GOVERNMENT UNDERSTAND THE BASIC RISKS WE ARE TAKING .

LIESMAN: COULD YOU GIVE US AN EXAMPLE OF HOW THIS WOULD WORK? I THINK THAT'S WHAT THE MARKET REALLY CARES ABOUT.YOU'RE DEDICATED $100 BILLION OF THE T.A.R.P. FUNDS FOR THESE ASSET PURCHASES. HOW WOULD YOU THEN -- HOW MUCH PRIVATE CAPITAL --

GEITHNER: WE HAVEN'T SAID EXACTLY -- IT'S GOING TO DEPEND ON WHAT THE STRUCTURE IS, BUT THE --

LIESMAN: GIVE US A WAY THAT A PRIVATE INVESTOR CAN COME IN AND USE THIS FUND TO TAKE ASSETS OFF OF SOME OF THE BANK'S BOOKS.

GEITHNER: LET ME STEP BACK FOR ONE SEC. A LOT OF CHALLENGES, BUT ONE OF THE MOST ACUTE CHALLENGES IS THE ABSENCE OF THE AVAILABILITY OF FINANCING TO PUT TO WORK TO HELP CLEAN UP THESE BALANCE SHEETS AND GET THE MARKETS GOING AGAIN.THAT'S SOMETHING THE MARKET CANNOT NOW DO, CANNOT NOW PROVIDE.THAT'S REALLY SOMETHING ONLY GOVERNMENTS AND CENTRAL BANKS CAN DO.A NECESSARY PATH IS GOING TO HAVE THE GOVERNMENT USE THAT CAPACITY TO PROVIDE FINANCING IN A WAY TO HELP GET PRIVATE MARKETS IN.AS YOU KNOW, PART OF THE REASON WHY THE MARKETS AREN'T WORKING IS BECAUSE THERE'S NO LIQUIDITY IN THE MARKETS AND BECAUSE OF THE ACUTE UNCERTAINTY OUT THERE ABOUT WHETHER THERE WILL BE FINANCING AVAILABLE. SO WHAT WE'RE TRYING TO DO IS DESIGN A STRUCTURE WHERE THE GOVERNMENT WILL COME IN WAYS THAT ALLOW SOME PRIVATE CAPITAL TO COME IN, TOO, AND USE THAT DISCIPLINE TO TRY TO MAKE SURE THAT WE'VE GOT A CAREFULLY DESIGNED VALUATION FOR THESE BASIC ASSETS. NOW, I KNOW YOU'RE INTERESTED IN THIS PROGRAM AND AN IMPORTANT PART OF THE PROGRAM, BUT VERY IMPORTANT TO FOCUS ON THESE TWO OTHER COMPONENTS OF THIS PROGRAM BECAUSE WE'RE NOT GOING TO GET THROUGH THIS WITHOUT MAKING SURE THAT THE BANKS ARE STRONG ENOUGH TO LEND IN A DEEPER RECESSION AND WE NEED TO GET THESE SECURITIZATION MARKETS GOING AGAIN, TOO, AND SO WE'VE GOT A VERY DRAMATICALLY EXPANDED BUT CAREFULLY DESIGNED PROGRAM, THE DETAILS OF WHICH ARE WIDELY UNDER STOOD IN THE MARKET TODAY.WE'RE CONFIDENT THAT WILL BE VERY EFFECTIVE IN BRINGING DOWN THE SPREADS AND GETTING THE MARKETS GOING AGAIN.YOU NEED TO LOOK AT THE THREE THINGS TOGETHER. THEY WORK TOGETHER.

LIESMAN: WHEN YOU DO THE STRESS TEST ON THESE BANKS, WILL BIG BANKS BE CLOSED DOWN?WILL THEY BE TAKEN OVER BY THE NATIONAL GOVERNMENT?

GEITHNER: STEVE, OUR OBJECTIVE AND REALLY OUR OBLIGATION IS TO TRY TO MAKE SURE WE PRESERVE THIS FINANCIAL SYSTEM IN PRIVATE

HANDS, AND WHERE WE HAVE TO DO EXCEPTIONAL THINGS AGAIN TO HELP PROTECT THE ECONOMY AS A WHOLE, THAT WE WANT TO DO SO IN WAYS IN WHICH PRIVATE CAPITAL WILL REPLACE PUBLIC CAPITAL AS SOON AS POSSIBLE.GOVERNMENTS ARE NOT GOOD AT RUNNING BANKS.

LIESMAN: IT'S BEEN MY PLEASURE TO ASK MANY SECRETARIES IF THEY SUPPORT A STRONG DOLLAR AND WHAT IN GOD'S NAME THAT MEANS

GEITHNER: ABSOLUTELY.A STRONG DOLLAR IS IN THE INTEREST OF THE UNITED STATES. OUR OBLIGATION IS TO TRY TO MAKE SURE WE ARE PURSUING POLICY THAT IS WILL IMPROVE CONFIDENCE IN AMERICANS AND AROUND THE WORLD THAT WE'RE DOING THINGS THAT WILL HELP THIS COUNTRY STRONGER IN THE FUTURE, TO GROW MORE RAPIDLY, AND DO SO IN WAYS THAT ARE BASICALLY RESPONSIBLE WITH THE RESOURCE RSS OF THE PUBLIC.

WILLIAMS: TOMORROW A LOT OF PROMINENT BANKERS ARE GOING BEFORE CONGRESS AND WE MAY HEAR MORE THAN ONE MEMBER OF CONGRESS SAYING SOMEBODY OUGHT TO GO TO JAIL FOR WHAT HAS HAPPENED IN THIS COUNTRY.YOU JUST TODAY IN OUR PRESENCE HAVE SAID I SCREWED UP. WE'VE HEARD THE PRESIDENT USE THAT VERY SAME PHRASE ABOUT ANOTHER MATTER WITHIN THE LAST FEW DAYS. YET THERE'S BEEN AN APPALLING LACK OF ACCOUNTABILITY AT THE TOP OF THE BANKING INDUSTRY.WHERE IS THE ACCOUNTABILITY? IS IT TIME WE HEARD IT?

GEITHNER: I AGREE AND VERY MUCH SHARE THE BASIC VIEW THAT THE QUALITY OF JUDGMENTS YOU HAVE SEEN ACROSS THE FINANCIAL SYSTEM ARE JUST DEEPLY TROUBLING. AS I SAID TODAY, THEY HAVE MADE OUR JOB SO MUCH HARDER BECAUSE IT MAKES IT SO MUCH HARDER TO

EXPLAIN TO PEOPLE WHY THE THINGS WE THINK ARE NECESSARY TO HELP AGAIN, HELP SMALL BUSINESSES AND FAMILIES GET ACCESS TO CREDIT,ARE NECESSARY AND IMPORTANT. WE NEED TO BRING A MUCH HIGHER STANDARD OF BASIC RESPONSIBILITY AND CARE OF JUDGMENT ACROSS THE SYSTEM. I KNOW THE PRESIDENT BELIEVES THIS STRONGLY, AND IT IS IN THE INTERESTS OF THOSE INSTITUTIONS AND THEIR BOARDS OF DIRECTORS THAT THEY DEMONSTRATE, AGAIN, A HIGHER QUALITY OF BASIC JUDGMENT.

LIESMAN: MR. SECRETARY, WE'VE NOT HAD THE CHANCE TO ASK YOU IN ADDITION ABOUT YOUR THOUGHTS ABOUT HOW TO SOLVE THE PROBLEMS IN THE AUTO INDUSTRY. ARE YOU IN FAVOR OF ADDITIONAL ASSISTANCE, EXTENDING THE LOANS THAT WERE GIVEN AND PROVIDING MORE MONEY TO THE AUTOMOBILE INDUSTRY?

GEITHNER: STEVE, THANKS FOR ASKING ABOUT THAT.AS YOU KNOW, ON FEBRUARY 17th WE'RE GOING TO SEE THE -- AT LEAST THE INITIAL OUTLINES OF THE BROADER RESTRUCTURING PLANS THAT THESE COMPANIES BELIEVE ARE NECESSARY TO GET THEMSELVES ON A PATH WHERE THEY'RE GOING TO BE FINANCIALLY VIABLE WITHOUT GOVERNMENT ASSISTANCE. IF THERE IS A CASE TO USE PUBLIC RESOURCES IN SUPPORT OF THAT OUTCOME, AND WE CAN MAKE THE CASE TO THE AMERICAN PEOPLE THAT WE'RE GOING TO ACHIEVE THROUGH THAT MECHANISM A SUFFICIENT RESTRUCTURING AGAIN TO LEAVE THESE COMPANIES WHERE THEY WILL BE STRONG ENOUGH IN THE FEW TO SURVIVE WITHOUT GOVERNMENT SUPPORT, WE WILL LOOK VERY CAREFULLY AT THE BEST WAY TO DO THAT.

WILLIAMS: MR. SECRETARY, KNOWING AND FEW UNDERSTAND THIS BETTER THAN YOU DO, THAT UNEMPLOYMENT IS A LAGGING INDICATOR, THAT AFTER THE LAST TWO RECESSIONS IT HAS CONTINUED TO GO UP WHEN THINGS HAVE ACTUALLY LEVELED OUT, WHAT IS IT YOU THINK WE'RE IN? THERE'S SOME ARGUMENT OVER NOMENCLATURE THESE DAYS, A RECESSION OR THE FIRST PORTION OF A DEPRESSION.

GEITHNER: THIS IS A RECESSION, AND YOU'RE RIGHT THAT THE PACE OF DETERIORATION IN AT LEAST PARTS OF OUR ECONOMY, NOT EVERYWHERE, PACE OF DETERIORATION IS STILL ACCELERATING.THAT'S WHY IT'S SO IMPORTANT THAT THE GOVERNMENT MOVE QUICKLY AND WITH FORCE TO TRY TO BRING THE KIND OF SUPPORT NEEDED TO GET -- TO HELP PRESERVE JOBS AND SUPPORT PRIVATE INVESTMENT, BUT IT'S ALSO WHY IT'S STILL IMPORTANT WE MOVE ON THE HOUSING FRONT AND WHY WE NEED TO GET THE FINANCE SYSTEM WORKING WITH RECOVERY INSTEAD OF AGAINST IT. THINGS ARE STILL DETERIORATING IN SOME PARTS OF THE ECONOMY AND WE NEED TO SLOW THE PACE OF DETERIORATION AND LAY A FIRMER FOUNDATION FOR RECOVERY.

WILLIAMS: STEVE LIESMAN GETS THE LAST QUESTION.

LIESMAN: A YEAR FROM NOW IF WE'RE SITTING HERE WILL YOU BE ABLE TO SAY WITH CONFIDENCE THAT THE BANKING SYSTEM IS BETTER AND THE ECONOMY IS ON THE MEND?

GEITHNER: I BELIEVE SO, YES.

LIESMAN: WHAT MAKES YOU CONFIDENT?

GEITHNER: BECAUSE I THINK WHAT WE DO AS A COUNTRY WILL BE GUIDED BY THE BASIC RECOGNITION, WHICH IS TRUE, THAT GOVERNMENTS NEED TO ACT, THEY NEED TO WORK TO HELP PROVIDE THE KIND OF DEMAND THE PRIVATE SECTOR CAN'T PROVIDE, TO TAKE THE RISK THE PRIVATE SECTOR CANNOT NOW TAKE, AND IF WE DO THAT EFFECTIVELY, WE WILL HELP BRING THIS RECOVERY BACK SOONER. THIS IS A MATTER OF WILL, NOT ABILITY. WE ARE A STRONG COUNTRY WITH TREMENDOUS RESOURCES.WHAT WE CAN'T DO IS TO FAIL TO ACT.

WILLIAMS: ON BEHALF OF MY COLLEAGUE, STEVE LIESMAN, MR. SECRETARY, THANK YOU VERY MUCH FOR BEING WILLING TO TAKE OUR QUESTIONS ON LIVE TELEVISION AFTER YOUR SPEECH. WE APPRECIATE IT.

GEITHNER: NICE TO SEE YOU BOTH.PLEASURE TO HAVE YOU AT THE TREASURY.

WILLIAMS: GOOD TO BE HERE.





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