Geithner: Financial Reform "Absolutely" in Cards

Treasury Secretary Timothy Geithner says it "absolutely" appears financial reform will make it through Congress.

In an interview that aired Thursday on "The Early Show", Geithner told co-anchor Harry Smith he's "very confident" of it, noting that "just the tone (on Capitol Hill) over the last couple of days -- it's changed. And … I've spent, like, a huge amount of time with Republicans over the last few weeks, if not just the last nine months, 15 months we've been doing this. And I think they really want to be for this, because I think anybody who looks at what we've been through, you know -- we have a crisis that caused 8.5 million Americans to lose their jobs. You know, thousands of businesses failed. This is not good for Americans. I think they (the GOP) wanna be for the reform."

And critical to that reform, Geithner asserted, is doing away with the idea of any bank being "too big to fail," and establishing a method of dismantling failing banks that won't involve taxpayer money, as it did last time - a method such as a pool of money to fund any such dismantling.

"That's what the reform system is gonna do," Geithner said. " That's the necessary thing. (Reform is) not possible without that"

In rejecting charges by some foes of reform that such a pool would send a signal to banks that it's OK for them to take big risks, Geithner asserted, "Our challenge, and I'm very confident we're gonna achieve this, is to make sure we have the ability -- and we did not have this in this crisis. We wanna have the ability to, if these large institutions manage themselves to the edge of failure, that we have the ability to come in, to step in and dismember them safely, without the taxpayer being exposed to any risk of loss. And so that shareholders bear (those costs)."

Asked whether Wall Street has learned the lessons of two years ago, Geithner replied, "I don't know if they all have. It's been a searing experience, not just for the country but for anybody in that business. … We're still living with the same system that gave us this crisis, but in some ways, it's worse than that because, again, you know, we had to do extraordinary things, deeply offensive things, to protect the economy from the mistakes that the financial sector made. And we cannot let them live in the future with the expectation that we're gonna step in again and protect them in the future. We can't do that. And so that's why reform is so important."

Geithner added, "You want the government to be acting more preemptively ahead of the storm, ahead of the earthquake, ahead of the financial fire to limit the amount of risk these firms can take so the economy's not vulnerable anymore to that. Now, part of that is -- making sure that if, despite those constraints, they get themselves in the position where they're gonna fail, we wanna be able to dismember them, break them up safely."

Smith remarked, "You know how crazy this has made Americans, the bailouts of banks, (costing) billions and billions of dollars. … The American public is out there saying. 'We paid for this, we're screwed, and Main Street is still in trouble." '

"Absolutely. Absolutely," Geithner agreed. "And you have a right to be angry. Again -- 'cause again, you saw a crisis that caused 8.5 million Americans to lose their jobs. Millions of Americans lost their homes. People saw the value of their savings cut dramatically. People who thought they were headed into retirement face the prospect of having to work another decade. Deeply damaging, a huge amount of pain, and they -- Americans are deeply angry and frustrated. And that's why we owe them, and I think our leaders in Washington owe them, a strong set of reforms in place."