WASHINGTON — U.S. Treasury Secretary Timothy Geithner says the administration will not accept a financial overhaul bill that does not provide strong consumer protection and restraints on risk taking by large banks.
Geithner urged lawmakers to listen to the families and businesses that were harmed by the financial crisis and not the financial institutions that brought on the crisis, the most severe to hit the country since the 1930s.
"The test we face is whether we can enact real reforms that provide strong protection for consumers, strong constraints on risk taking by large institutions and strong tools to protect the economy and taxpayers from future crises," Geithner said in remarks prepared for delivery to the American Enterprise Institute, a conservative think tank.
"We will not accept a bill that does not meet that test," Geithner said. His comments came as the Senate Banking Committee was preparing to take up legislation sponsored by Democratic Sen. Christopher Dodd, the chairman of the committee. The committee approved the legislation Monday on a party-line vote. The bill now goes to the Senate, where its prospects remain in doubt.
In his remarks, Geithner said that the country was facing a "defining moment" in the battle to enact financial reform. The administration put forward a set of recommendations nine months ago and the House passed a bill in December. But progress has been slower in the Senate, with Dodd so far unable to win Republican support for an overhaul.
Geithner said that America's leadership on global financial matters was at stake in the congressional debate.
"If we fail to act, America will lose this opportunity to set the global agenda, to define new high standards for all financial companies and to lead the debate in shaping a level playing field on terms that play to our strengths," Geithner said.
"If we fail to act, American firms that operate globally will face a more balkanized system, with higher costs of doing business and riddled with pockets of lower standards designed to attract the kinds of risky behavior we are seeking to end."
Geithner urged lawmakers to "be careful whose voice you listen to" in deciding what provisions to support. He said lawmakers needed to "listen less to those whose judgments brought us this crisis" and who were complaining about having to live with increased regulations and increased fees to pay for the costs of the crisis. He said, instead, lawmakers should be listening to the families and businesses "still suffering from this crisis."