In prepared remarks that Treasury Secretary-designate Timothy Geithner will deliver before the Senate Finance Committee, he said the ongoing crisis requires a forceful reaction on the part of government. While defending the positive impact of the TARP funds thus far, he said "serious reform" is needed before releasing the second tranche of funds.

In prepared remarks obtained by Bloomberg and to be delivered at 10 a.m. EST, Geithner said a free market is the best way to run an economy but in the current climate, markets alone cannot solve all problems.

"Well-designed financial regulations with strong enforcement are absolutely critical to protecting the integrity of our economy," he said.

Echoing comments from Federal Chairman Ben Bernanke and his colleague from the Obama transition team, Lawrence Summers, Geithner said the government faces a problem of doing too little rather than too much.

"The tragic history of financial crises is a history of failures by governments to act with the speed and force commensurate with the severity of the crisis," he said.

He outlined four aggressive actions: taking immediate action to restore the flow of credit; supporting investments that lay the foundation for a stronger economic future; implementing a clear strategy to restore a sustainable fiscal position, and; reforming the U.S. and global economies so they never have to face a crisis of this severity again.

"The American Recovery and Reinvestment Plan will meet that test," he argued. "It provides powerful and direct support to help get people back to work, to encourage private investment, and to break the cycle currently crippling our economy--a cycle where concern about growth hurts investment and spending, causes further job loss, and makes it harder for families and businesses to get access to credit."

The outgoing President of the New York Federal Reserve also said national security depends on a strong economy at home, and as Treasury Secretary he would make the right policy choices to support the economy.

By Patrick McGee and edited by Stephen Huebl
©CEP News Ltd. 2009