The following is an excerpted transcript of ABC News Anchor Charles Gibson's interview with Treasury Secretary Timothy Geithner at the G-20 economic summit on the Obama administration's plans for the global financial crisis, international cooperation and the auto industry, for "World News With Charles Gibson" in London, April 1, 2009.
CHARLES GIBSON: Mr. Secretary, the president said today let's not get too hung up on the differences between nations at this conference, but aren't there very real differences on the critical issue, which is the willingness to commit to stimulus spending?
TREASURY SECRETARY TIM GEITHNER: Well, Charlie, I think if you look at what's already happened, there is a huge amount of fiscal stimulus already in the pipeline committed by countries not just in the United States or in Europe, but you saw what Japan announced just yesterday, China, India, developing countries around the world. So you just look at what countries have done. There is very, very broad support already for the kind of program the president came here with, which is to bring growth back as quickly as possible and make sure we have open markets, expanding trade, which are so important to American business.
GIBSON: But when you look at what the Germans are spending, the French are spending, the Italians are spending, when the president of the EU says the U.S. spending package is the road to hell, that speaks to some real differences, doesn't it?
GEITHNER: I think if you look at what countries are doing, there's a lot in common with the basic program the president began with. Look at what they're actually doing. You see central banks around the world moving very, very aggressively to make sure interest rates are low. You see governments moving to put a – the strongest program support for growth and private investment you've seen since the Second World War. Countries are moving aggressively to make sure they're fixing their financial systems, bringing credit back, they're committing to make sure that they're avoiding protectionist measures and getting markets open again, expanding again. Those markets are critically important for American business and there's very, very strong support on the need to put in place tougher, smarter, stronger, 21st-century rules of the game for the financial system. Because all our financial systems were overwhelmed by these global capital flows and we need to make sure that we have, you know, much more aggressive, stronger, comprehensive oversight in place if we're going to avoid a crisis like this again.
GIBSON: Well, but the communiques, the draft agreement that we've seen at this meeting, talks about those things in general terms. In terms of stimulus spending, without a number, willingness to spend 2 percent, maybe even 3 percent of GDP, isn't that really basically just a piece of paper?
GEITHNER: No, absolutely not. Again, if you look at the scale of commitments already made, programs passed by national governments, in moving now into the pipelines, it's very, very powerful. Of course we want to make sure it's sustained, that all countries and we're all in different circumstances, are doing what's necessary to make sure in their individual economies, they're getting growth back too. Each of our actions are going to be more powerful if we're moving together and again, I think the world is with the president on this. I think there is very broad support for it. I think the differences you've seen are dramatically exaggerated, Now we are in slightly different circumstances each of us and what's going to be necessary for each of our economies individually is going to vary. But I think this is the strongest moment of cooperation globally you've seen since the Second World War.
GIBSON: Well let me come back to the president of the EU saying it's a road to hell what the United States is doing in terms of stimulus spending. I come back to that -- that bespeaks a real difference, doesn't it?
GEITHNER: Well again, look at the actions we're already taking. Again, in Germany, in France, across continental Europe, in Japan, in China, India, very, very strong stimulus already. Now again, our systems work somewhat differently, but you need to look at the power of the actions already – and again, the really important thing Charlie is that governments commit to do what's necessary to bring the recovery back. Now that's going to require a very substantial, sustained support of stimulus and what we need to do is make sure the leaders who we are seeing together and saying, we will do what is necessary. We will keep at it until we get global recovery back.
GIBSON: Well I want to speak to you on numbers, but the Germans, $100 billion roughly in stimulus spending, the French about 30, Italians about 10.
GEITHNER: Again you want to look against the relative size of their economy. You look in the context of their existing programs in place for unemployment insurance, how those actually work. If you add them together, there is more policy support for growth in the pipeline now getting traction than you have seen in decades.
GIBSON: You also mentioned too the general agreement on avoiding protectionism. The last meeting of the G-20, there was a certain general agreement on that point and a number of nations have gone around and adopted protectionist measures, haven't they?
GEITHNER: Well, I think again, there's always a few exceptions to these kind of things, but the commitment is very strong. I think all countries understand how important it is that we have markets that are expanding and growing, critically important to the United States. The fortunes of businesses across America are much more closely tied to those in the rest of the world. Emerging markets are the most rapidly growing markets for U.S. exports anywhere, so the United States has a very, very strong interest in making sure all markets stay open and those markets stay open and I think that kind of commitment you're going to see sustained and reinforced today.
GIBSON: We depend so on rest of the world to invest in the United States, particularly when we're so deeply into deficit spending. When you hear Chinese officials saying they're not sure anymore about the integrity of the U.S. Treasuries, how concerned are you? How concerned should we all be?
GEITHNER: You know, our obligation is to do what's necessary to make sure that we get our fiscal position, once we get through this crisis, back to the point where we're living within our means. And the president is committed to do that. I think the political support for fiscal responsibility is much stronger today in the United States than it's been in a decade, and I think that will help ensure that we can demonstrate to not just American investors, but investors around the world, that we're going to have the will as a country, when we get through this, to make sure we bring our deficits back closer to the point that they're sustainable over time.
That's going to be critically important in the United States. It will make sure recovery is stronger. It will make sure there's more confidence, more private investment in the future.
The president is deeply committed to this. And again, I think you could step back, Charlie. There is more support in the United States, in the U.S. context now, than you've seen in decades.
People don't debate anymore whether deficits matter. They all agree they matter. But our first obligation is to get recovery back on track so we have a stronger economy, more productive economy, and that will help us also bring our deficits down, down in the future.
GIBSON: But doesn't it indicate a long-term -- I mean, that's an aspirational goal you talked about.
GEITHNER: I know, it's a deeply important commitment. You're going to see that commitment reaffirmed by the Congress as the budget resolution moves through both houses. It's a critically important thing, and I think there will be very few people who dispute that in the United States.
GIBSON: So, when the Chinese say that, you think what?
GEITHNER: Well, I think, again, our basic responsibility and obligation, not just to Americans, but countries around the world, is to make sure not just we're moving aggressively to bring recovery back, but at the same time, we lay out a path so that we're back -- we're going to move back to the point where we're living within our means of the country. Now, that's going to require some very hard choices.
The president's budget laid out how we would make those choices. Congress is going to have to make those choices along with us. And again, if you look at what we're doing in terms of what we're proposing on health care, we're going to make the biggest impact on helping reduce those long-term deficits that this country has contemplated making in a very long period of time.
GIBSON: So, when other countries start talking about the fact we need a different world currency, you don't think that that indicates a long-term uncertainty about the financial and fiscal integrity of the United States?
GEITHNER: I don't believe so, no. I think that, again, we're just going to see very strong support around that table tomorrow, in the next two days, very strong support around the world to put in place the kind of reforms around the overall international financial system that will deliver a more stable, more sustainable, more balanced growth for the world economies. So that's the most important thing. Countries share that basic objective.
GIBSON: While we're talking, let me ask you about a couple of domestic issues.
GIBSON: The president was very specific about things that the auto industry had to do in order to get more money from the United States government. The banks are getting much, much larger dollars without anywhere near those kinds of strings attached, or very specific things that they have to do. Do you have a double standard?
GEITHNER: We don't. Absolutely not. I want to emphasize a couple things, Charlie.
We've already seen very, very dramatic restructuring across our financial system. We just sat back and looked at the institutions that existed a year ago, some of the largest institutions in the country. The landscape of the financial system has changed dramatically over that period of time, and where we provide assistance for the financial system, we're going to make sure it comes on conditions to make sure the system emerges stronger.
There's accountability where we need to, so the taxpayers' interests are protected. That basic standard and basic objective is the same across everything we're doing to help get recovery back on track. Now, it's going to require different things in different cases, but if you look at where the government has already acted, we're meeting that test consistently.
GIBSON: So, in the case of the automobile industry, we asked one very prominent CEO at GM to step aside. Might be there be similar -- it would be very reassuring to people, perhaps, that there were similar moves with banks.
GEITHNER: Well again -- if you look at where the government has already acted, if you look at AIG, if you look at Fannie and Freddie, we've had to do exceptional things. We've made sure that that comes with the kind of changes in management or the board necessary to make sure these banks, these financial institutions, emerge stronger. That's our basic test.
You know, our responsibility is to make sure we have a financial system that's working for recovery, that we have a banking system that's able to provide the kind of credit that American business and families need to invest in the future. That's the basic objective that has to guide everything we do.
GIBSON: There was a lot of money appropriated for the TARP program to get the banks to recover, enormous amounts of money, that have now been allocated to many banks. The question of accountability in that money, the administration says there will be complete accountability.
Just yesterday, on Capitol Hill, there was testimony that the Treasury Department has not cooperated in terms of getting accountability on that money. Fair, unfair?
GEITHNER: Unfair. We've put in place very strong reforms to make sure there is much more transparency and accountability across all these programs.
In my first weeks in office, we committed to make sure we put the specific terms of all these forms of assistance on to the Web site. We made it clear that any assistance we provided banks in terms of capital going forward would require that banks commit to use those resources to expand their lending capacity, to report on what they're actually doing with lending.
There is much more transparency we're bringing to this program across the board. And you know, we're moving very quickly, Charlie, to make sure that we're bringing interest rates down, expanding access to credit. And where we've acted, you've seen significant results already.
GIBSON: Just quoting from testimony yesterday that accountability -- and this is a quote -- "... does not seem to be a priority for the Treasury Department." Three hundred and sixty-four banks, testimony yesterday that the Treasury has only cooperated in looking at accountability of two of them. Bank of America..
GEITHNER: Again, I don't think that's fair. We are moving very quickly across the board.
You know, we've been in office for two months, Charlie. And if you look at what we've done over this period of time, we have done -- not just bring about much stronger standards for transparency and accountability across these programs, but we've put in place some very powerful programs that are already achieving results.
Just look at mortgages, a good example. Mortgage interest rates now are at historic lows because of the actions of the Fed and the Treasury. Because of the president's program, millions of Americans now are able to refinance and take advantage of lower interest rates. If you look at a typical American who lives in a house that costs around $200,000, these benefits could increase the basic cash in their hands by up to $2,000 a year.
These are very strong, powerful programs. And we are doing -- you've seen this government, with the Congress, move more quickly than governments typically move in years to address a financial crisis.
Now, we've got a lot to do. We're trying to do a lot in a very short period of time. But the basic obligation we share is to not just make sure we're doing as much as we can to bring credit back, but we're doing so in ways that protect the taxpayer and provide the level of accountability and transparency the American people deserve.
GIBSON: Just on one issue, you told George Stephanopoulos on Sunday the TARP program had about $132 billion left. A lot of people looking at this say, no, it's much, much less. It's about $30 billion, $32 billion, $35 billion that's left.
First of all, I'm amazed that there could be that kind of disparity, that there's those kinds of differences in estimates. And secondly, what's the true number?
GEITHNER: The true number is roughly $135 billion. Now, that includes an estimate, Charlie, about what we might expect banks to repay over the next several quarters. So that number, we think it's a conservative estimate, but it does include a rough estimate of what money we expect to come back over this program. But we've laid all that out. People can look at that for themselves.
Again, our obligation is to use these resources Congress has given us as quickly and as wisely and as effective as we can. We've got substantial resources remaining, and we're going to continue on that path. Again, because recovery of the economy as a whole depends on a financial system that's doing a better job of making credit available.
GIBSON: Just a general question on this. We saw a sort of populist fervor that erupted over the AIG bonuses. Is it possible to assuage both Wall Street and the banks and Main Street at the same time?
GEITHNER: You know, there is a deep and understandable anger across this country by people who were careful and responsible in their financial decisions, who are now bearing such a huge burden of suffering because of this financial crisis, caused by people who took too much risk they didn't understand. And that anger and frustration is completely understandable.
You know, financial crises are just deeply unfair, indiscriminate of the damage they cause. But our basic obligation, again, and the most important thing to help make sure we're protecting people who are most vulnerable and who need access to credit, to make sure we're getting this financial system working again, it's a difficult balance, but we're going to find the right balance and make sure that, again, our assistance is not going to reward failure, it's going to benefit the people that depend on this financial system.
Businesses and families depend on banks. You know, we're not doing this, Charlie, for banks, we're doing it for the American economy and all economies depend on a working financial system.
GIBSON: Mr. Secretary, good to talk to you.
GEITHNER: Thanks for having me.
GIBSON: Thank you.