Transcript: Treasury Secretary Timothy Geithner and Alan Greenspan

Now, the program itself -- we're in a much better position than I thought we were going to be, frankly, if you just look back four months ago, three months ago or six months ago. The financial system today is more stable. The cost of credit -- credit is more available. Cost of credit is down significantly. Broad concern about the collapse of the financial system has receded dramatically, and that is very, very, very important to the prospects of...

(CROSSTALK)

STEPHANOPOULOS: We're not going to see a collapse, are we?

GEITHNER: No, not at all. That's not going to happen. It's absolutely preventable, and again, there's much more confidence today than we've seen the last I think even in a year, in the basic stability of the U.S. financial system, and that is a very, very important accomplishment. And we have done that -- when I was here four months ago, we had roughly $40 billion of authority left in the TARP. Today we have roughly $130 billion, in partly because we have been very successful in having private capital come back into this financial system. And we've had more than $70 billion...

STEPHANOPOULOS: Paid back.

GEITHNER: ... come back into the government. And that money goes directly to reduce our debt.

STEPHANOPOULOS: How much more are you expecting to be paid back?

GEITHNER: Can't tell, but substantial additional sums will come back. And we are getting -- we've already earned about $6 billion for the taxpayer on those investments, and you know, this program is delivering very important improvements in availability of credit, which is the ultimate test.

STEPHANOPOULOS: So it's going in the right direction, it's going up. Can you say now with certainty that you're not going to have to come back to the Congress for more money?

GEITHNER: We do not plan to ask for more money, and I think it's quite unlikely that we do. But the important thing, George, as you just said, is that people need to understand that we will do what is necessary to make sure that viable businesses, families that have been very conservative (ph) and prudent have access to credit at reasonable terms. That's the basic purpose of these programs, and we're going to do what's necessary to achieve that.

STEPHANOPOULOS: The issue of executive compensation for those banks, a lot of them are trying to get out from under the TARP restriction because they want to get out from the compensation restrictions. The House passed a bill on Friday to give shareholders more rights to vote on executive compensation, also the SEC more power. The Republicans in the House were very critical. Take a look.

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(UNKNOWN): This bill continues the Democrat majority's tendency to go to the default solution for every problem -- create a government bureaucracy to make decisions better left to private citizens.

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STEPHANOPOULOS: Is the government getting too involved?

GEITHNER: Absolutely not. And I think that really, everybody understands that we cannot have our financial system go back to the practices that brought this economy to the brink of collapse.

STEPHANOPOULOS: Do you think that's happening?

GEITHNER: No, I don't think we're at that point yet, but it is going to take fundamental reform of our financial system.

Compensation reforms are an important part of that, but we need to go beyond that. And that's why the president has moved so early in this administration to propose very far-reaching reforms to provide much stronger protection for consumers and deliver a more stable financial system and give us better tools to manage future crises.

And the broader fundamental reforms to protect consumers, create a more stable system are absolutely important, one of the president's top legislative priorities this year. And I think, ultimately, you're going to find very broad-based support for those reforms.

STEPHANOPOULOS: OK, Mr. Secretary, thanks very much for your time today.

GEITHNER: Good to see you.

STEPHANOPOULOS: Now, for another perspective on the economy, let's bring in former Fed chairman Alan Greenspan.

When he joined us last September, his view could not have been more sobering.

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GREENSPAN: This is a once-in-a-half-century, probably once-in-a-century type of event.

STEPHANOPOULOS: Is it the worst you've ever seen in your career?

GREENSPAN: Oh, by far. There's no question that this is in the process of outstripping anything I've seen. And it still is not resolved and it still has a way to go.

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STEPHANOPOULOS: And Alan Greenspan joins us again now.

Welcome back.

GREENSPAN: (OFF-MIKE)

STEPHANOPOULOS: So, last September, a once-in-a-century event, the worst you'd ever seen. Is it over?

GREENSPAN: Not quite, but we're getting very close.

The -- as the Treasury secretary just mentioned, there's been a very significant improvement in the financial system. And it's been the financial system where the problems have been...

STEPHANOPOULOS: And collapse isn't going to happen?

GREENSPAN: Collapse, I think, is now off the table. We were teetering for awhile, but I do think that the TARP program, for example, was very helpful in shoring up the capitals, that stock of banks and the like. And not an insignificant event is the $3.5 trillion increase in the stock market value of American corporations.

Because there are capital gains and they flow out throughout the system, and you could see their impact in the credit markets and in the equity markets.

STEPHANOPOULOS: How about the broader economy? Have we hit a bottom, and are we going to see a bounce?

GREENSPAN: Well, I'm pretty sure we've already seen the bottom. In fact, if you look at the weekly production figures for various different industries, it's clear that we've turned, perhaps in the middle of last month, the middle of July. And indeed you're seeing a major increase in assemblies in auto and trucks before the clunker issue even arose.

STEPHANOPOULOS: Has it helped?

GREENSPAN: Well, obviously, it's helped. It's an interesting issue. I mean, I have qualms about the concept, but there is no doubt that that very extraordinary response is a very important indicator that the state of confidence in the economy is beginning to pick up.

If we had been -- the clunker program had been put in place six months ago, it would have probably been a dud.

STEPHANOPOULOS: Well, that's interesting because, you know, you also saw, about five months ago, the administration also putting out a credit for first-time homebuyers.

Has that made a difference?

GREENSPAN: I think it has, but the problems in homebuilding and home sales and mainly home prices is much broader than that. In fact, the way I would define it is that, unless home prices stabilize within, say, maybe, 5 percent down from here, we're going to run into some...