Treasury Secretary Timothy Geithner said Thursday he doesn't think that the European debt crisis will derail the U.S. economic recovery. He also praised the steps Europe is taking to deal with the crisis.
Geithner said that because of the momentum the economy has built up over the past several months, the United States is in a strong position to weather the global turmoil caused by Europe's debt problems.
"I think it is important to note that the world economy came into this period of concerns about Europe with stronger underlying momentum and growth than many people expected," Geithner said in an interview with CNBC. "That is certainly true for the United States. I think we have a moderate but pretty solid recovery in place."
He said it was important for Europe to move quickly to put in place the support programs needed to bolster Greece and other European countries with heavy debt burdens.
"They have laid out a very strong program and they are starting to put that in place and it is starting to get a little more traction," Geithner said.
He said Europe's program of providing debt-payment support to Greece and a backup package for other nations, as well as working to trim high budget deficits represented a strong plan with the right elements.
He said the challenge would be "to put it in place." He praised actions that have already been taken by individual countries including Germany, Greece and Portugal.
Geithner was interviewed on a stopover in Alaska on his way to Busan, South Korea. There he will meet for two days of talks with finance ministers and central bank governors of the Group of 20 rich industrial countries and major developing nations such as China, Brazil and India.
One of the major issues the G-20 will be tackling is putting together the outlines of a coordinated program of financial reforms that can be endorsed by G-20 leaders, including President Barack Obama, when they meet in Toronto on June 26-27.
One of the issues being debated is developing a global standard for capital reserves that financial institutions must hold as cushion against potential loan losses.
Geithner declined to answer whether the United States was pushing for the G-20 to adopt a global target of 12 percent of an institution's assets being held as a capital reserve. That would represent an increase from a current U.S. target of around 8 percent.
"We want to find a balance between making sure that these firms run with much more conservative, much stronger cushions against loss in future crises," he said, refusing to say what target was being considered.
Geithner said the United States was in a strong bargaining position in the G-20 discussions because the House and Senate have both passed their own versions of sweeping financial overhaul bills. Differences in those bills will have to be reconciled before a measure can go to Obama for his signature. Geithner said the administration believed that Congress will be able to pass a final bill by the July 4th recess.
Geithner said that after the broader overhaul is in place the administration planned to move toward reforming the operations of Fannie Mae and Freddie Mac, two giant mortgage institutions that had to be taken over by the government during the financial crisis in 2008.
Republicans have criticized the administration for not including Fannie and Freddie reform in its original financial overhaul proposal.
"We are going to move on reform of Fannie and Freddie and the broader housing finance system as soon as we get this (first financial overhaul) bill passed," Geithner said. "I think we should be able to move quite quickly once we get this first stage of reforms in place."
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