Marketplace host Kai Ryssdal just taped an interview with Treasury Secretary Tim Geithner. The interview airs this evening, but I sat in on the taping and took some notes.
Geithner says the plan announced today is only one part of the solution, but it's clear he believes getting banks to lend more money is a major component of the economic recovery.
But Kai asked him a critical question:
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 got other things on their mind than taking on 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 gonna have to fall, no matter what. But what we need to do is make sure that the supply of credit available does not fall below the economically viable demand for credit. You know, so you have businesses and families that 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. We want to make sure they have that opportunity. And that requires that we repair this financial system."
Okay, again, he's saying that getting banks to lend is in the best interest of the people. But Kai follows up with this question:
Ryssdal: How do you convince those taxpayers? Because you have two constituencies here, right? You have Wall Street, who you have to make believe this plan works. And you've got taxpayers, who you have to convince that this is not just another handout of taxpayer money to private industry. How you do that?
Geithner : We have only one constituency, which is the average working American that's trying to get themselves to the point where they can do what every family wants to do. That's the only constituency we have. 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 the deeper recession. And 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....
Ryssdal: It won't come as a surprise to you though that a lot of people out there in country probably don't see it that way.
Geithner : And I completely understand that, and their skepticism and concern is perfectly reasonable... I think most Americans understand, most businesses understand in particular that you need a financial system for an economy to work. It's banks that provide credit, which is really the lifeblood and oxygen of the economy.
That's a great point for discussion. Is credit the lifeblood of the economy or should it be? If not, what is? And do you believe that taxpayers are, in fact, the only constituent?
And you can listen to the full interview here: