Geithner: Liquidity moves to help preserve growth
WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner said on Thursday that central bank liquidity actions would ease some pressure on European banks and help preserve global growth.
"I think this was a responsible, sensible way for the Federal Reserve and other central banks to try to diminish some of the pressures you're seeing on European financial institutions," he told reporters following a visit to the Consumer Financial Protection Bureau.
Geithner said increased access to dollar funding would help reduce the need for European banks to deleverage their balance sheets and pull back credit. This in turn will reduce pressure on growth due to a sudden halt in lending from banks wracked by the debt crisis.
"There's a very strong and compelling case for that type of action," added Geithner, who was president of the Federal Reserve Bank of New York in late 2008 when the Fed and other central banks took a number of extraordinary actions to boost liquidity.
The Fed, along with the European Central Bank and counterparts in Japan, Canada, Britain and Switzerland agreed to cut the rate on dollar swap lines by 50 basis points to a rate currently around 0.6 percent. This will make it easier for European banks to obtain dollar funding than from money markets that have pulled back due to the European financial crisis.
Geithner also called on the U.S. Senate to quickly hold a vote to confirm Richard Cordray as the CFPB's director, saying that those opposing him would be swayed by his credentials. Until Cordray, the former Ohio attorney general, is confirmed, the controversial agency's rulemaking power is extremely limited.
A block of some 44 Republican senators, urged on by the financial services industry, have signed a letter opposing Cordray's nomination and have threatened to block any vote unless the Treasury agrees to weaken the bureau by having it be run by a council of regulators instead of a single director and subject its budget to congressional appropriations.
Geithner said he wasn't willing to make those compromises. In passing the Dodd-Frank financial reform law in 2010, the previous Congress carefully designed the checks and balances provided by the agency to protect consumers, he said.
"We think they got that balance right. We don't see any case for changing that balance and I don't believe we should have to do that," he said.
He said the best way to persuade Congress to confirm Cordray was to make the case that it was doing worthwhile work.
(Reporting by David Lawder; Editing by Andrew Hay)
- Exclusive: Radar data suggests missing Malaysia plane deliberately flown way off course - sources
- Investigators focus on foul play behind missing Malaysia plane: sources |
- Kremlin website hit by 'powerful' cyber attack
- West prepares sanctions as Russia presses on with Crimea takeover |
- UPDATE 1-Rolls-Royce concurs with Malaysia on missing jet's engine data