Geithner: ‘We are not Sweden’

Treasury Secretary Timothy Geithner said Monday that the administration decided on its public-private plan to rescue the U.S. financial system because “we are not Sweden,” the country known for nationalizing troubled banks and other sectors of its economy.

“We are the United States of America, we are not Sweden,” Mr. Geithner said.

The public-private investment program Mr. Geithner unveiled yesterday would assist private investors to buy up toxic debt assets from banks on the brink of insolvency instead of subjecting them to outright nationalization by the federal government.

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The plan came under fierce criticism Monday from New York Times columnist Paul Krugman, the liberal Harvard economist, who said the administration’s “cash for trash” solution was a warmed-over version of what the Bush administration tried last year — saying that “it won’t work.”

Mr. Krugman said the United States should follow Sweden’s example in the 1990s when it took “temporary control of truly insolvent banks, in order to clean up their books.”

But Mr. Geithner rejected that approach, saying that the plan was the most workable among a limited number of options. He said he was “surprised” by Mr. Krugman’s criticisms in his column.