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Geithner tries to reassure market

He goes on TV to allay concerns about the U.S.' credit rating after an S&P report.

April 20, 2011|Jim Puzzanghera

WASHINGTON — Treasury Secretary Timothy F. Geithner took to the business-TV airwaves to try to ease market concerns about the U.S. fiscal situation in the wake of Standard & Poor's warning that the nation's AAA credit rating was in danger.

Geithner, one of the Obama administration's point people on the issue, told CNBC and Bloomberg TV he was optimistic that the White House and congressional Republicans would bridge their differences and agree on a way to reduce the huge budget deficit.

"What I would say to people around the world and to Americans, to businessmen, to investors around the world, [is] that the president recognizes and the leadership in the Congress recognize that we have to start to bring these deficits down," Geithner told CNBC on Tuesday. "Now, we can do that. That's within our capacity to do."

S&P, one of the major bond rating companies, said Monday that a 1-in-3 chance existed that it would lower the nation's AAA rating because the government might not be able to address its mounting budget deficits.

For The Record
Los Angeles Times Thursday, April 21, 2011 Home Edition Main News Part A Page 4 News Desk 1 inches; 32 words Type of Material: Correction
Geithner outlook: An article in the April 20 Business section about Treasury Secretary Timothy F. Geithner's efforts to calm financial markets carried a Washington dateline. The story was reported from Los Angeles.

Asked about the S&P report, which rattled the markets Monday, Geithner said he disagreed with the rating firm's negative assessment.

"Actually, I think things are better than they've been if you want to think about the prospects for improving our long-term fiscal position," Geithner said.

"I think if you listen very carefully now to what's happening in Washington, you see people on both sides, Democrats and Republicans, agree with the president that we have to put in place some reforms now to bring down our long-term deficits," he said.

Market interest rates on Treasury bonds continued to edge lower Tuesday, suggesting that investors weren't worried by S&P's warning. The yield on the 10-year Treasury note slipped to 3.36% from 3.37% on Monday. Yields also declined slightly on Monday despite S&P's announcement.

Congressional leaders and the White House are working on ways to reduce the deficit as well as to raise the $14.3-trillion ceiling on U.S. debt, a cap that will be reached in a few weeks.

"The Congress is going to pass an increase in the debt ceiling," Geithner said. "They recognize that. They know they have to do that. They've always done that."

Last Saturday, Geithner briefed President Obama about S&P's upcoming release, the White House said. And Tuesday, Geithner echoed White House comments that S&P was misreading the partisan bickering in Washington as reflecting an inability to deal with the budget deficit.

"Washington's a hard place to read, and it's hard for people looking at Washington to look past the political rhetoric and be confident that you're going to see politicians here do ... the right thing," Geithner told Bloomberg TV.

But he said there was "a lot of consensus" in Washington about addressing the fiscal situation and that politicians "have to translate that into action."

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jim.puzzanghera@latimes.com

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