Transcript: Diane Sawyer Interviews Treasury Secretary Timothy Geithner

GEITHNER:
Well -- well, again, two -- two failings. The government didn't move early enough to help contain the damage. And -- and we're two years into this. You know, this thing really did start two years ago. And a more forceful response earlier would have made it less damaging. And I think that's -- that -- that was the tragic failure of policy in this crisis. But to fix this going forward, we've got to reform this financial system. You know, you said, Diane, at the beginning, people are -- are worried we did too much. And some people are worried we haven't done enough yet.

SAWYER:
Yes.

GEITHNER:
We're going to --

SAWYER:
Warren Buffet said that it's like taking half a Viagra.

GEITHNER:
(LAUGH) Yeah. But what the president said, and what's important, is we're going to do what it takes to get this economy growing again. To help make sure people can get back to work. People are taking -- are investing again for the future. And that's the ultimate test of --

SAWYER:
And if it means another stimulus, another half of Viagra, you'll do it?

GEITHNER:
Well, we're going to look carefully, any sensible program. And if it offers the prospect of getting growth back to a stronger position sooner, then we'll take a hard look at it.

SAWYER:
Are there banks still too big to fail? Is that a peril?

GEITHNER:
It is -- it is -- a huge peril for the country and for the global financial system. And that's why reform is so important. And we've proposed the most sweeping set of changes to the financial system this country's considered in decades. But it requires Congress to legislate. And it requires countries around the world moving with us. 'Cause if we just do it here, then the risk will just go somewhere else.

SAWYER:
A lot of attention paid recently to the bundling and securitizing of insurance policies. Life insurance policies, which seems to be gambling that someone will actually die earlier. What? Three trillion out there. Is this another potential -- time bomb? If this is allowed to happen?

GEITHNER:
And one reason why reform is important and soon is because you don't want to see a return to the sort of innovation of complex products that can be damaging to the --

SAWYER:
Will you prevent this? Will you specifically intervene to prevent this?

GEITHNER:
We're proposing to establish in one place responsibility to write strong rules to protect consumers and investors and to enforce those rules. That responsibility was spread across a whole bunch of entities, they didn't do an adequate job. They left large parts of the system with no oversight and discipline, no enforcement. And that's something that has to change.

SAWYER:
But a lot of people just think in -- on principle, you should not be allowed to profit from this. Do you think in principle you shouldn't be allowed to profit on it?

GEITHNER:
See, I don't know about principles. But the reality is we need a system that does a better job, again, of protecting consumers and investors. And provides for a more stable system. Less prone to these big bubble and bust cycles. They're just enormously damaging as we've seen.

SAWYER:
At this point, this morning, after one year or two years, if we look at the reality, is it a v-shape or a w-shaped, double dip recovery? Is there another wave coming?

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