Geithner: Global Economies Must CooperateSecretary Timothy Geithner, ahead of the G-7 economic submit later this week, says economies around the globe need to work together to lay the foundation for a sound future.
Geithner acknowledged that the U.S. has a responsibility and shares part of the blame for the current economic crisis, but says countries need to pull together to lay the groundwork for a new, more stable and more sustainable pattern of growth in the future.
Geithner told the Economic Club in Washington that the all nations may not be in the same boat, but they're facing the same storm. He said that a recovery will take time, though noting an easing in the rate of the decline in global economic growth and trade.
The G-7 the finance minister from seven industrial powers will meet Friday and be followed by a larger meeting of the Group of 20 ministers. Earlier in April, G-20 members agreed to enforce tighter regulation of the global financial system, and pledged to expand the International Monetary Fund's resources to more than $1 trillion.
Geithner sees stricter oversight of the global financial system will limit excessive risk-taking and help prevent future crises. Also, the support of the IMF, will aid the stabilization efforts for emerging economies hard hit in the global downturn, he said. The aid will help these economies recover and act as a kind of insurance policy for the world economy, and also for the US economy.
This week the IMF reported it expects banks and other financial institutions around the globe to lose $4 trillion in writedowns as the world economy deteriorates. It called for further decisive and effective policy actions and international coordination.
Geithner strongly defended the federal government's aid to troubled banks, including the $700 billion Troubled Asset Relief Program, (TARP) in testimony before Congress earlier this week. Alluding to that testimony, Geithner said he sees strong banks repaying TARP resources, and says there is a lot of value in that. He adds that he expects there will be a substantial amount of resources will come back.