The U.S. Senate Committee on Finance held the confirmation hearing for Treasury Secretary nominee Timothy Geithner on January 21, 2009. Geithner's testimony follows below. For a webcast of the hearing, click here.
Chairman Baucus, Ranking Member Grassley, members of the
Committee, it is an honor to come before you today.
I want to thank you for meeting with me over these last few weeks, and
helping me understand your interests and concerns.
I am grateful to President Obama for asking me to lead the Treasury
Department at this critical moment.
I am deeply grateful to my wife, Carole, and to my children and family for
their support and sacrifice.
Throughout my career, I have had the great privilege of serving our
country in institutions responsible for U.S. economic policy.
In these roles, I learned several important lessons about government and
I believe that confidence in the strength and integrity of our financial
system, confidence in our commitment to fiscal prudence, and confidence in the
value of our currency are absolutely critical to the fortunes of all Americans.
I believe that markets are central to innovation and to growth, but that
markets alone cannot solve all problems. Well-designed financial regulations
with strong enforcement are absolutely critical to protecting the integrity of our
I also believe that as America’s economic fortunes become ever more tied
to the rest of the world, we need to invest more at home to help Americans
confront the challenges of trade and technological change.
Finally, I believe that our national security depends critically on our
economic strength at home. We can have a great and positive impact on the
global economic and financial system, but only if the quality of our ideas and
actions win the support of other nations.
We now confront extraordinary challenges. A severe recession, here and
in countries around the world. A catastrophic loss of trust and confidence in our
financial system. Unprecedented foreclosure rates, small businesses struggling to
stay afloat, millions of Americans worried about losing their jobs and savings,
growing job losses, a deep uncertainty about what tomorrow holds. At the food
bank where my wife and son volunteer, the lines are long and getting longer.
Our test is to act with the strength, speed, and care necessary to get our
economy back on track, and to restore America’s faith in our economic future.
We must meet that test, and I believe we can, if we take aggressive action
in four areas:
First, we must act quickly to provide substantial support for economic
recovery and to get credit flowing again.
The tragic history of financial crises is a history of failures by
governments to act with the speed and force commensurate with the severity of
the crisis. If our policy response is tentative and incrementalist, if we do not
demonstrate by our actions a clear and consistent commitment to do what is
necessary to solve the problem, then we risk greater damage to living standards,
to the economy’s productive potential, and to the fabric of our financial system.
Senators, the ultimate costs of this crisis will be greater, if we do not act
with sufficient strength now.
In a crisis of this magnitude, the most prudent course is the most forceful
The American Recovery and Reinvestment Plan will meet that test.
It provides powerful and direct support to help get people back to work, to
encourage private investment, and to break the cycle currently crippling our
economy—a cycle where concern about growth hurts investment and spending,
causes further job loss, and makes it harder for families and businesses to get
access to credit.
This plan is a critical part of the solution, but it has to be accompanied by
aggressive action to address the housing crisis and to get credit flowing again.
Last fall, Congress passed the Emergency Economic Stabilization Act.
Your action—and I know it was a difficult decision for many of you—your action
helped prevent an economic crisis from becoming a catastrophe. The actions of
the Senate last week to authorize additional resources will enable us to take the
steps necessary to help get credit flowing.
President Obama and I share your belief that this program needs serious
I know there are serious concerns about transparency and accountability,
confusion about the goals of the program, and deep skepticism about whether we
are using the taxpayers’ money wisely.
Many people believe the program has allowed too much upside for
financial institutions, while doing too little for small business owners, families
who are struggling to keep their jobs and make ends meet, and innocent
We have to fundamentally reform this program to ensure that there is
enough credit available to support recovery. We will do this with tough
conditions to protect the taxpayer and the necessary transparency to allow the
American people to see how and where their money is being spent and the results
those investments are delivering.
And we are going to do that. This is an important program and we need to
make it work.
Second, as we move quickly to get our economy back on track and repair
the financial system, we must make investments that lay the foundation for a
stronger economic future.
The strength of the recovery will depend critically on the investments and
reforms we initiate now to expand access to health care and reduce its cost, to
move toward energy independence, to sharpen and deepen the skills of American
workers and to modernize our infrastructure.
These investments will make our economy more productive and more
Third, our program to restore economic growth has to be accompanied by
a clear strategy to get us back as quickly as possible to a sustainable fiscal
position and to unwind the extraordinary interventions taken to stabilize the
We need to demonstrate with clear and compelling commitments now,
that when we have effectively resolved the crisis and recovery is firmly
established, that as a nation, we will return to living within our means.
Finally, we must move ahead with comprehensive financial reform now so
that the U.S. economy and the global economy never again face a crisis of this
Senators, in this crisis, our financial system failed to meet its most basic
The system was too fragile and unstable, and because of this, the system
was unfair and unjust.
Individuals, families and businesses that were careful and responsible
were damaged by the actions of those who were not.
We need to move quickly to build a stronger, more resilient system now,
with much greater protections for consumers and investors, with much stronger
tools to prevent and respond to future crises.
We have experienced a great loss of faith in our economy, but we have not
lost the most fundamental of American abilities—the ability to change, to adapt,
and to reform.
This will take time.
It will require action on a scale that we have not seen in generations.
And we will have to keep at it until we restore the confidence of
Americans and the world in America’s economic leadership.
This is my commitment to you, and the President’s promise to the
We are a strong nation with great resources. We can meet these
challenges—we can’t afford not to.
Our shared goal is a healthy, more stable, and more competitive freemarket
economic system that can once again do what it does best: encourage
people to invest and invent, to innovate, create jobs, and build stronger
communities and better lives.
Before I finish, I want to say how grateful I am to my colleagues at the
New York Fed and across the Federal Reserve. Like the career staff at the
Treasury, they are an exceptionally talented and dedicated group of public
servants. Brave, creative, and pragmatic. It has been my privilege to work with
If you and your colleagues in the Senate give me the opportunity to serve
as Secretary of the Treasury, I will do everything I can to justify your trust and