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US Treasury Secretary Timothy Geithner said Tuesday in Washington D.C. that the current international financial system must be reformed to address 21st Century challenges. “After the experiences of the Great Depression and World War II, the United States led in the creation of the international financial system that anchored prosperity and stability for more than 60 years,” Geithner said in testimony prepared for the Senate Foreign Relations Committee. “Today, that system must be reformed to address 21st Century challenges,” he said. “The United States again faces an opportunity to help shape a system that ensures better economic potential for future generations in America and around the world.” He said that the current financial crisis clearly demonstrated the central role that the IMF plays in the global system as a crisis responder. “Looking ahead, the IMF will have a critical role in supporting balanced growth and financial stability,” said the Treasury chief.” What we ask of the IMF, and frankly what is needed, is candid, transparent, and independent surveillance to support this process.” Read more

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US Treasury Secretary Timothy Geithner said on Saturday in Instabul at a meeting of International Monetary Fund (IMF) that economic recovery signs are “stronger” and have appeared “sooner” than expected throughout the world, while also saying it’s too soon to retreat from stimulus programs. In a statement issued at a meeting in there, Secretary Geithner said global financial conditions have improved “dramatically.” The US housing market has stabilized, while jobless rate in the USA is remains “unacceptably high” and the financial system remains damaged, as a result, it’s not the time for governments to roll back stimulus, he said.

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The S&P 500, since sinking to a 12- year low of 676.53 on March 9 surged 25% as banks from Citigroup Inc. to JP Morgan Chase said they made money in the first two months of 2009 and Treasury Secretary Timothy Geithner announced plans to finance as much as US$1T in purchases of distressed assets from financial firms.

“No matter how you feel about the stimulus package, some of it is going to stick and the economy should stabilize in the second or third quarter,” said Bruce Bittles the Nashville- based chief investment strategist at Robert W. Baird & Co.“If that’s going to happen, the market will sniff it out.”

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Crude Oil prices fell alongside the broader markets last week on the limited details released about a Treasury Department program to raise more than US$1T in public and private funds to free up credit markets. The Dow Jones industrials lost 400 pts after Treasury Secretary Timothy Geithner announced the rescue plan last Tuesday, and light, sweet crude for March delivery sank by US$2.01 bbl to settle at US$37.55bbl on the New York Mercantile Exchange. US President Barack Obama’s US$838B economic recovery plan, which was approved by the US Senate did little to reverse Crude Oil’s downturn. Phil Flynn, an analyst at Alaron Trading Corp., said investors appear concerned about the inflationary effects of massive government spending.

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Last Tuesday Timothy Geithner unveiled a raft of new measures aimed at returning functionality to the besieged credit markets. Geithner outlined the picture of the latest US recovery attempt, i.e., promoting greater transparency and stricter oversight of both established and new financial stability programs, providing capital to institutions in desperate need of a cash infusion, committing up to US$1T to support consumer and business lending, addressing the housing crisis and reducing foreclosures, and stricter oversight of US taxpayer money. “The American people will be able to see where their tax dollars are going and the return on their government’s investment,” the Treasury Secretary said. “They will be able to see whether the conditions placed on banks are being met and enforced.

They will be able to see whether boards of directors are being responsible with the taxpayer dollars and how they are compensating their executives. And they will be able to see how these actions are affecting the overall flow of lending and the cost of borrowing.” This information will be made available on a new Web site: FinancialStability.gov.

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Some of the large banks in the USA may require more aid to remain solvent, say some economists and other finance experts. This is a sobering commentary on the growing mountain of losses that can overwhelm the value of the banks’ assets.”The United States banking system is effectively insolvent,” it quoted Nouriel Roubini, a professor of economics at the Stern School of Business at New York University, as saying. He estimates that total losses on loans by USA financial firms and the fall in the market value of their assets will reach US$3.6T, up from his previous estimate of US$2T according to the New York Times last week.

U.S. Treasury Secretary Timothy Geithner unveiled a plan last week to soak up as much as US$1T in bad assets on banks’ books and expand a Federal Reserve program to support up to US$1Tin new loans. The market yawned and rolled over as experts said that in order for the US banks to resume the ample lending needed to restart the wheels of commerce, bigger, and more direct government role than in the Treasury Department’s plan called outlined. The government needs to really get in and close the weakest banks, inject capital into the surviving banks, and sell off the bad assets sooner rather then later.

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