Transcript: Timothy Geithner Interview with George Stephanopoulos

STEPHANOPOULOS: The International Monetary Fund is suggesting that all the big industrial nations have a tax on bank balance sheets and bank profits. I know the administration has pushed for a bank fee. Will you continue to push for this and do you support that IMF report?

GEITHNER: Well, that's a very good report. It did what we asked for last September, which is take a look at how best to do this. But, you know, the president proposed in January that we put a fee on risk, on the largest institutions, as a way to pay back the taxpayer for any losses in the TARP. So we've been able to put out this financial fire at much lower costs than we expected. But we want to make sure the American people understand that we want the banks to pay for any losses the government -- the taxpayer was exposed to because of the financial emergency.

STEPHANOPOULOS: Let's talk a little bit about Goldman Sachs. You saw the SEC is taking action against Goldman Sachs. Did anyone in the Obama administration, in Treasury, in the White House, in the government, get any heads up?

GEITHNER: Absolutely not.

STEPHANOPOULOS: Nothing?

GEITHNER: And again, the -- that could never happen, it should never happen. It's a fully independent agency and they give no warnings, no notice, no heads up. And there should be no involvement by any person in the executive branch ever in those kind of investigations. And I'm very confident our system protects against that risk.

STEPHANOPOULOS: And I know you can't talk about the investigation per se, but how about the underlying issue? You know, as we look at this, it raises -- it seemed as if -- well, not seemed as if. Goldman was putting together a pure bet. There is no...

GEITHNER: George, you're -- you are trying to ask me to comment on the merits or the details of the case or the practice.

STEPHANOPOULOS: No, I, I'm…

STEPHANOPOULOS: Not on -- not on the practice. Say it's--we're not going to call the firm Goldman. These firms are setting up what are called synthetic CDOs, collateralized debt obligations. These are just bets. Why should firms who are getting backing from the federal government be allowed to do this at all? We end up paying, don't we?

GEITHNER: Let me do it slightly differently, because, again, I want to be careful. There's an important tradition of not commenting on enforcement of banks or -- or their merits. But what you need to have is a system in which this stuff happens not in the dark --where people -- some people can make some money, but it comes at enormous risk to the system as a whole, but we bring derivatives out of the dark so those types of activities happen in broad daylight with full disclosure and with the cops able to police this stuff more effectively. You know, we don't -- we want to have a system in which the financial cops can act preemptively to deal with these kind of things, not be forced to come in after the fact and clean up the mess. And that's the kind of system we want to build. But that's what's at stakes. You want to make sure you bring this stuff out of the dark, it happens with full transparency and disclosure, and the cops on the beat have the tools they need to deter this stuff -- any kind of fraud, any kind of activity, ahead of the crisis.

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