Secretary Tim Geithner Discusses the 'Healthy, but Slow' Economic Recovery

You know you saw economic growth fall off a cliff. You say the value of people's savings plumate. Wealth destroyed. People facing the prospect that they work 20 more years beyond what they thought they were going to. Millions of people losing their homes. Enormous, enormous damage to the productive capacity of this country, leaving us and this president, when he came into office, with huge deficits and a real risk of things deteriorating further. So it was absolutely an extraordinary, challenging period.

MORAN: And the markets were panicking. You came in, you made your maden speech. The markets tanked 380 points that day. What was that like for you?

GEITHNER: You know, I knew when we came in, and we spent a huge amount of time with the president in the weeks of December thinking through our strategy, but we knew at that point it was clear that the world was -- growth was falling off the cliff. You know, the U.S. economy shrank at a 6 percent annual rate in the fourth quarter. Industrial countries around the world were falling at a sharper pace. Trade just stopped. And you saw, you know, trillions of dollars of wealth destroyed.

And so what you saw in January and February and March were the effects of those pressures on confidence in the financial system. So as we came in and even as Congress passed stimulus, those data -- the data on how bad the fourth quarter was -- were coming into the public attention. That caused another wave of damage to confidence. And again, huge pressure on the financial system. But . . .

MORAN: But then you stepped before the microphones and this -- and the market doesn't like you.

GEITHNER: Yes. Well, you know, again, what we did at the beginning, I think this was the right judgement to do is, we gave an initial framework, laid out the broad plan we were going to pursue in the financial sector, and then we went and did it. We went and put in place the more -- a comprehensive program on housing that's been very helpful in helping slow the erosion of the housing markets. We've put in place this substantial program to bring more transparency and disclosure to bank balance sheet and its allowed, you know, substantial amounts of new equity to come into the financial system, helping stabilize the banking system.

We've put in place these very powerful programs to help repair the securitization markets that are central to consumer lending, small business lending, student lending. Those markets are getting slightly better. And a program to help free up these markets for real estate related loans that were the center of the crisis. We -- in that initial framework, we laid out the broad strategy, but people wanted to see us act. But we did act. We act on each of those fronts and that's helped lay a better foundation for confidence.

MORAN: Now, look ahead. What kind of unemployment rate is the country looking at?

GEITHNER: Well, I think unemployment is almost certainly going to rise further before it peaks.

MORAN: Right (ph) at 10 percent?

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