Geithner: Worst Not Over For Jobless, GM Is Here To Stay

Geithner: Worst Not Over For Jobless, GM Is Here To Stay

DOW JONES NEWSWIRES

U.S. Treasury Secretary Timothy Geithner said Sunday that unemployment could go higher before the economy begins to recover and insisted that ailing auto maker General Motors Corp. "will be part of this country’s future."

Geithner made his remarks while addressing a number of economic issues during an appearance on CBS’ "Face the Nation" news show.

Asked whether the Treasury Department will ask Congress for more money to help bail out the financial system and move the economy out of the recession, he said, "We can’t make that judgment at this time. Our first priority is to move on the programs Congress has passed."

On the loss of jobs, he said the unemployment rate could go higher because of a lagging effect between economic recovery and new hiring.

"It depends on how effective we are in moving," he said. "We need the countries around the world moving with us.

"There are encouraging signs…but it’s going to take some time to get through this," he said.

As for General Motors, which is trying to come up with a reorganization plan that would convince the government to give it more aid, the Treasury secretary insisted that "GM is going to be part of this country’s future."

"We want to see a strong automotive industry emerge from this recession," he said, adding that the government must be sure that GM "can emerge strong enough without having to have government help on an ongoing basis."

As to whether GM will have to file for bankruptcy protection, he said "there’s a range of options. They’ve made some progress on restructuring but they’re not there yet."

Asked whether executives at troubled financial companies could be forced out by the government, as was GM Chairman and Chief Executive Rick Wagoner, Geithner said that "if in the future, banks need exceptional assistance [from the government] and that requires a change of management and board, we will do that."

On whether the government will force banks to sell their toxic assets to improve conditions for lending, he said that "banks have a large incentive to clean up their balance sheets."

"We’ll make sure we encourage that kind of action. We’ll do what’s necessary to make sure our banking system emerges stronger," he said.

As to different estimates reported on how much is left in the government’s Troubled Asset Relief Program, or TARP, Geithner insisted that "we know where every dollar has gone."

The government has sought transparency and accountability, he said, referring to information made public on the Web site at www.financialstability.gov.

As for protecting against executives at firms aided by the government being given big bonuses, he said Treasury’s "obligation is to apply the laws passed by Congress. We want greater lending, not providing excess compensation."

 

-By Art Daniels, Dow Jones Newswires; 201-938-4370; arthur.daniels@dowjones.com

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