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Geithner says market won't solve woes

Associated Press / March 30, 2009
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WASHINGTON - Treasury Secretary Timothy Geithner defended his approach to fixing the country's economic mess yesterday, saying "the market will not solve this" while disclosing a bailout fund for battered banks has $135 billion left and might need more.

Geithner used his first Sunday talk show appearances to promote President Obama's massive government spending plan to ease credit, help borrowers, and inject billions of dollars into the financial sector. Long kept behind the scenes, the treasury secretary has emerged as the administration's champion of a plan that fueled an uptick in Wall Street markets.

"We came through a period where people borrowed too much and we let our financial system take on much too much risk," Geithner said. "And the consequences of those choices, made over years, were a huge boom. And that boom, the air is now coming out of that and that's causing enormous damage."

Obama and his administration last week announced a program to help banks free themselves of so-called "toxic assets."

The plan calls for the administration to partner with private investors, the Federal Reserve, and the Federal Deposit Insurance Corp. to buy as much as $1 trillion in toxic assets from banks. Geithner cautioned against immediate expectations.

"It's very important for people to understand that, you know, it took us a long time to get into this mess. It's going to take us a while to get out of this," he said. "Progress is not going to be even. It's not going to be steady."

Geithner said Washington alone was equipped to salvage an economy that has seen jobs lost and credit shrink.

Geithner has faced a rough start to his time at Treasury. Unpaid taxes cost him votes during his Senate confirmation, and lax oversight for embattled American International Group Inc.'s bonuses drew Republican calls for his resignation.

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