Transcript: Treasury Secretary Timothy Geithner and Alan Greenspan

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.

(BEGIN VIDEO CLIP)

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.

(END VIDEO CLIP)

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.

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