Treasury Secretary Timothy Geithner said today that the biggest lesson he has learned so far in tackling the financial crisis was not the risk of doing too much to revive the economy, but of doing too little.
"To get through this, governments need to act. Great obligation, responsibility for governments to act to solve these things. The market will not solve this, and the great risk for us is we do too little, not that we do too much," Geithner told ABC News' George Stephanopoulos in a "This Week" interview.
Asked if he feels like the "comeback kid" after the markets bounced back this week as he unveiled his banking plan, Geithner explained, "We're facing still a lot of challenges. You can't judge a plan on the reaction one day, one week. But we've done a lot in these eight weeks. You know, the president's housing plan has already helped bring down interest rates. Millions of Americans now are going to be able to take advantage of lower interest rates. If you take a typical family living in a $180,000 home, the rate reductions we've already seen could save them as much as $2,000 a year."
Looking forward, Geithner addressed concerns that the economy will emerge from this crisis into a "brand new world."
Stephanopoulos asked whether Americans had to get used to the idea that the boom times aren't coming back.
"We want to have sustainable growth," Geithner replied. "We don't want to have a recovery which is going to be artificial and short-lived, just produce the seeds of the next crisis. We want to have a durable recovery based on a stronger foundation that has a stronger, more productive economy emerging through it, where the gains are more broadly shared across the economy as a whole."
Geithner went on to say that income inequality "should go down" in the future. "If you look at the record of performance in the '90s, you know, we had very strong productivity growth during a period of fiscal discipline, fiscal responsibility, strong private investment, and the gains were shared much more broadly."
But can Americans expect to see a return to the broad across-the-board affluence of the 1990s? Geithner said "Americans should be optimistic about the future of this economy."
The Treasury secretary also rejected concerns about hyperinflation down the road. "That's not going to happen in this country, will never happen....We have a strong, independent Fed, with a clear authority from the Congress to keep inflation stable at low levels going forward.
On the lessons learned from the outrage surrounding the AIG bonuses and how he would have handled the situation differently, Geithner said "We had no good choices in those conducts. These were contracts that were set well before the government came in, before Ed Liddy became GEO. We're a nation of laws. We cannot run this country, expect our country and our economy to work, businesses to function, if there is an ongoing fear the government will come in and retroactively change the terms of existing contracts.
"We moved very, very quickly to make sure that we were going to get them to renegotiate future payments, that there were strong conditions on compensation going forward. That's what we're going to do."
Geithner also offered up his first public accounting of the remaining TARP funds. "We have roughly $135 billion left of uncommitted resources," Geithner said.