WASHINGTON (AP) — Treasury Secretary Timothy F. Geithner said Thursday it’s “deeply unfair” that some financial institutions that got taxpayer-paid bailouts are emerging in better shape from the recession than millions of ordinary Americans.
He acknowledged public outrage over that and said people watched with disdain as Washington protected high-risk banks and investment houses, even as the national unemployment rate was soaring to double-digit levels for the first time in a generation.
But in a nationally broadcast interview, Mr. Geithner also argued that President Obama had no choice when facing a financial crisis but to support then-President George W. Bush’s “unpopular” bailout plan.
Mr. Geithner said the other option was to “stand back” and do nothing, “and that would have been calamitous for the American economy.”
Mr. Geithner was president of the Federal Reserve Bank of New York at the peak of the crisis. The New York Fed managed the bailouts, including the $182 billion rescue of insurance giant American International Group Inc.
In September 2008, the government embarked on a program of assisting the threatened financial institutions, eventually creating the sweeping, $700 billion Troubled Asset Relief Program (TARP) used to rescue teetering banks.
Mr. Geithner also said that administration officials are “very worried” about recovering the more than 8 million jobs lost in the recession. He said the unemployment rate of 9.7 percent is “unacceptably high,” but he noted that business growth has been improving and he expects the economy to pick up slowly in the coming months.
“This was the worst economic crisis since the Great Depression,” Mr. Geithner said. “It’s going to take us a long time to heal that damage. ”
More than 11 million people now are drawing unemployment insurance benefits, and the overall jobless rate of 9.7 percent understates the true level of economic misery because many people who give up looking for work are no longer in the official count of the unemployed. The Bureau of Labor Statistics on Friday will release a report on conditions in the labor markets in March.
A report Thursday said that initial claims for unemployment benefits fell slightly last week as the recovering economy moves closer to generating more jobs. The Labor Department said new jobless benefit claims dropped 6,000 to a seasonally adjusted 439,000, nearly matching analysts’ estimates. It’s the fourth drop in five weeks.
Mr. Geithner said he hopes skeptical voters will note legislation moving through Congress to bring reforms to the financial system.
“What happened in our country should never happen again,” he said. “People were paid for taking enormous risks. It was a crazy way to run a financial system,” Mr. Geithner said. “It’s the government’s job … to do a better job of restraining that kind of risk-taking.”
Mr. Geithner’s interview was broadcast Thursday on NBC’s “Today” show.