Tuesday, April 07, 2009

Geithner: We Won't Hesitate to Change Management at Banks

Posted by Sam Stein, Huffington Post at 8:45 PM on April 5, 2009.

Timothy Geithner took what appeared to be a stronger line when it came to the potential firing of bank CEOs Sunday.

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Timothy Geithner took what appeared to be a stronger line when it came to the potential firing of bank CEOs Sunday, saying that the administration would not hesitate to make "a change of the management" at those institutions if it was deemed necessary.

Appearing on CBS' "Face the Nation," the Treasury Secretary was pressed twice as to why GM's Rick Wagoner was forced out by the White House while heads at some of the country's most troubled banks remained in office.

"What I'll say is this," said Geithner. "If in the future banks need exceptional assistance in order to get through this, then we'll make sure that assistance comes ... [with conditions] not just to protect the taxpayer but to make sure that it's the kind of restructuring for them to emerge stronger, and where that requires a change of the management of the board, we'll do that."

"You will?" asked host Bob Schieffer.

"Where that is necessary," replied Geithner. "Where it meets the test. Where it's necessary to do what it is we are here to do which is to make sure that this financial system supports recovery and the banks emerge stronger."

In the days following Wagoner's firing, the Obama White House had struggled to respond to accusations that it used a double standard when it came to the automotive and financial bailouts. On Sunday, Geither insisted that there was a "single principle" guiding the administration's mindset: to make companies requiring "exceptional assistance" more accountable. If that meant changes in management, so be it.

Nevertheless, Geithner did make the case that in the context of economic recovery the financial sector took precedence over the automobile industry. The former can save the later, he argued, but not the other way around.

"Economies depend on financial systems," Geithner said. "They provide the credit that is the oxygen for economies. And recovery requires, recovery of the automobile industry requires, that we have a financial system that is doing a better job of making credit available on reasonable terms for business and families. And that basic objective has to guide everything we do."


Tagged as: timothy geithner, geithner bank ceos, geithner banks, geithner firings, obama banks ceos, obama economic recovery

Sam Stein is a Political Reporter at the Huffington Post, based in Washington, D.C.

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