Financial Overhaul Hung-up

Treasury Secretary Timothy Geithner acknowledged Tuesday the federal government had to take some "deeply offensive" steps to help the country get past the financial crisis a year ago.

But he also said in a nationally broadcast interview that things are "dramatically different" now, although it's too early to say the economy is in recovery.

"A year ago we really were on the verge of a full-scale run" on banks, along the lines of the 1930s Depression, Geithner said in an interview broadcast on ABC's "Good Morning America." He said "the biggest fear now, the biggest challenge, is to make sure we change the rules of the game so it doesn't happen again."

Asked about projections of a $1.6 trillion deficit and a growing U.S. debt obligation to other countries, Geithner said the Obama administration still wants to avoid an increase in income taxes on the middle class. The secretary noted Barack Obama's pledge against such a hike during his presidential campaign and said Obama remains "very committed" to it.

He also said it was too early to say just when the government might let allow expiration of an emergency lending program for financial institutions (TARP) and said he also didn't know how soon Washington could extricate itself from direct involvement in the auto industry, although he said it likely won't be within a year.

Geithner said the administration cannot suggest any guarantee of financial stability, but said "what we have an obligation to do is to put that in place here and around the world. ... That's our obligation."

He acknowledged that to a large degree, Washington's intervention in the private markets hasn't gone over well with large elements of the public and said "the government had to do some deeply offensive things to undo the damage. ... But we're going to get out of this as soon as possible."

On the budget deficits, Geithner said, "I think Americans understand we have an unsustainable fiscal position. We have to bring these deficits down over time." He said the country must "get our fiscal house in order" and stressed that Obama is vehemently opposed to a general income tax increase for people who make under $250,000 a year.

The secretary said that while things are better than they were a year ago, "I would say there's no recovery yet. We define recovery ... as people back to work, people able to get a job again, businesses investing again ..and we're not at that point."

"We're going to do what it takes to get this economy going again," he said. "We're going to look carefully at any sensible program."


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