Kai Ryssdal: Timothy Geithner is the secretary of the Treasury. Mr. Secretary, good to have you with us.
Timothy Geithner: Thanks for having me.
Ryssdal: The idea of this plan seems to be that getting the bad assets off the books is going to get the banks lending again. But given everything else that's going on in the economy -- consumer confidence is shot, the housing industry is still in trouble -- how can you be confident that this is going to turn things around?
Geithner: Well, you're right. This is just a piece of a broader set of initiatives we're doing to try and make sure that the banking system is going back to the business of doing what it needs to do, which is to make credit available to businesses and to families, make sure it's making credit available on reasonable terms, and that's going to require a whole range of things. The president laid out a housing plan a few weeks ago that's already helping bring down interest rates. We've also moved to put in place a series of programs that target lending to small businesses. We launched a program last week to help get the securitization to the secondary markets going again. Again, these markets critical for anybody who wants to buy a house, buy a car. Student-lending markets all depend on these markets. And we're moving, really, across the board to try to put as much support in as quickly as possible because getting the financial system working again is critical to making this broader stimulus package work.
Ryssdal: Given, though, that there is some lending going on, why do we need this plan right now?
Geithner: Part of the problem in the financial system is that banks made a bunch of bad loans over the last four years or five years. Those loans are still sitting on their balance sheets. People are worried whether there's going to be losses on those loans that might be large going forward. That's making it harder for them to raise capital on their own. And, therefore, some of them are pulling back on credit -- shrinking instead of expanding. And to break that cycle we need to provide a market for them to help clean up that mess, that will make it easier for them to raise capital again. Because we need them to be in a position where they're providing the oxygen the economy needs to recover.
Ryssdal: Even if you can get the banks lending, though, do you think consumers have the appetite? I mean they're already loaded down with debt, they've got other things on their mind than taking out a new mortgage or buying a new car.
Geithner: You're right that we're coming off a period where people borrowed too much, and lending's going to have to fall no matter what. But what we need to do is to make sure that the supply of credit available does not fall below the economically viable demand for credit. So you have business and families, again, that are . . . were careful and prudent. They've got a business they want to expand. Or they've got an education they want to finance, or a car or a home they want to borrow, and we want to make sure they have that opportunity.
Ryssdal: This plan depends very heavily on the involvement of private investors -- very heavily -- who it would be understandable if they were gun shy to get involved right now, given the drubbing that they have been taking up on Capitol Hill and the press. Are you working with potential private investors in this plan to let them know that you'll protect them if things become politically difficult?
Geithner: Well, you're right to say that to fix this financial crisis we need people willing to take risk. If they won't take risks, than the government is going to end up taking on a much greater share of the loss and risk in this stuff. And we want to avoid that. So we want them to take risks. For them to take risks, they need to be confident that there's going to be a clearly established, consistently applied set of rules of the game. And we're going to have to get that balance right. And we need to make sure that the American people understand that the resources we provide, the assistance we provide, is not going to reward failure or to unduly benefit a bunch of people who helped contribute to this mess. But, of course, we also need to fix the system, so that it's, again, providing the credit necessary for recovery. That's a difficult balance, but we'll find the right balance.
Ryssdal: Well, how do you convince those taxpayers? Because you have two constituencies here, right? You've got Wall Street, who you have to make believe that this plan works. And then you've got taxpayers who you have to convince that this is not just another handout of taxpayer money to private industry. How do you do that?
Geithner: We have only one constituency, which is the average working American trying to get themselves to the point where they can do what every family wants to do. And everything we're doing is designed to make sure that we get the economy back on track more quickly, so that they suffer less from the consequences of a deeper recession. That requires, in some cases, that we provide support to banks. But we're not doing it for the banks. We're doing it for the people who depend on banks, who need banks in order to, again, finance their kids' education, or to buy a new house, or finance a big spike in health-care expenditures. That's the basic objective. We owe one constituency.
Ryssdal: It won't come as a surprise to you, though, that a lot of people out there in the country probably don't see it that way.
Geithner: No, and I completely understand that. And their skepticism and concern is perfectly reasonable. On the other hand, now, if you look at what's happening across the country -- even though we've seen some signs of improvement in some parts of the economy -- you know, people are still under a lot of pressure. You know, I think most Americans understand, most businesses understand, in particular, that, you know, you need a financial system for an economy to work. It's banks that provide credit, which is really the lifeblood and the oxygen of an economy. And what we need to do is to make sure that we're doing what's necessary to get this economy back on track, and part of that's going to require programs like we announced today, which are carefully designed to protect the taxpayer interest to try to get private capital to come alongside the government, so the government itself is not taking on all those risks.
Ryssdal: The president said today -- and you were sitting right next to him when he said it -- that we still have a long way to go before the economy turns around. And rather than ask you how long that's going to be, I'd like to know what you're going to be looking for that's going to let you know.
Geithner: You want to look at spending, 'cause that's a measure fundamentally of confidence. And of course there's a broad range of other things that you can look at that tell you something about the process of repair in the financial system. Mortgage-interest rates are a good example. Again, we want the American people to understand that the government is going to do what's necessary to get this economy back on track. And we're going to keep at it until we do that.
Ryssdal: Timothy Geithner, secretary of the Treasury, thanks very much for your time.
Geithner: Nice to talk to you.