Fallout: The Financial Crisis

Geithner questioned on taxes, bailouts

Steve Henn Jan 21, 2009
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Fallout: The Financial Crisis

Geithner questioned on taxes, bailouts

Steve Henn Jan 21, 2009
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TEXT OF STORY

KAI RYSSDAL: At that hearing John mentioned, Obama’s choice to take over the Treasury Department faced some tough questions. Timothy Geithner was asked about mistakes on his tax returns. But also about his part in crafting some of last year’s biggest bailouts.

In his role as president of the New York Federal Reserve, Geithner was at the table with Bernanke and Paulson when the Troubled Asset Relief Program was created. Today he said the plan isn’t working and needs to be fixed.

Marketplace’s Steve Henn reports.


STEVE HENN: Tim Geithner didn’t waste any time getting to the point about the massive federal bailout of banks.

TIMOTHY GEITHNER: President Obama and I believe that this program needs reform.

There are lots of problems but the biggest is that many of America’s largest banks are still teetering on the edge of insolvency.

GEITHNER: In a crisis of this magnitude the most prudent course is the most forceful course.

And in the past week Obama’s economic team has hinted it could set up an enormous, so-called bad bank. This government-run bank would buy up mortgage-backed assets that are losing value and pushing private banks toward bankruptcy.

Chuck Schumer: The thing I worry about with it is cost.

Democratic Sen. Chuck Schumer of New York.

SCHUMER: I did a little calling to people who would know and they said it could be $3 trillion, $4 trillion if you did the whole good-bank, bad-bank across the board.

Geithner said his team’s been studying the idea. It’s complicated and could be expensive. But it’s been part of most successful government bailouts around the world.

Other Senators said they worried buying up bad investments would cost taxpayers billions. But Republican Sen. Jim Bunning of Kentucky said his chief concern was Geithner’s own track record.

JIM BUNNING: Mr. Geithner has been involved in just about every flawed bailout action of the previous administration.

Bunning wondered if someone so intimately involved in the failed policies of the past could actually deliver the kind of change the economy needs.

In Washington, I’m Steven Henn for Marketplace.

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