U.S. Treasury Secretary Tim Geithner said Wednesday that European Union leaders have the political will to keep the euro currency union from breaking apart.
"They've decided that it's in their interest to hold this together," Geithner said at the Council on Foreign Relations in Washington. "They tell us privately that they will do whatever is necessary to hold it together."
Geithner backed the steps EU leaders have outlined to form a banking union, boost crisis resources and revive the ailing European economy. But he stressed that the Europeans need to act quickly to enact those reforms as the crisis enters "another major escalation."
"If you wait to move in these things, and you let market get ahead of you, then you increase the cost of the solution and make it harder to get there," said Geithner. "There's no argument for doing it slowly, you get there as quickly as you can."
Geithner said the U.S.economy is in a better position to withstand a shock out of Europe than it was a year ago. But he acknowledged that the euro crisis is hurting economic growth around the world.
"We have a big stake in helping them deal with this more effectively," said Geithner, adding that he plans to do just that at the Group of 20 meeting in Mexico next week.
Geithner said it is "unfair" to view Germany as the main impediment to progress in Europe. He said Berlin is prepared to put "substantial resources" behind the euro project, but not without other nations committing to make the necessary economic reforms. "That's a very reasonable position," said Geithner.
In addition, Geithner addressed the massive multi-billion dollar trading loss at JPMorgan (JPM).
The chief executive of JPMorgan, Jamie Dimon, told lawmakers Wednesday that the loss was due to insufficient risk controls and a failure by traders to understand the bets they were placing. But he refused to say that JPMorgan was using trades from its chief investment office to make money.
Geithner called JPMorgan's loss "a significant failure of risk management," but he said it was "manageable given the basic capital position of that institution."
He stressed that it is impossible to know how any given investment will play out, saying "you need to have a lot of humility about how you predict these things." The only way to protect the economy from reckless banks is to ensure that the financial system is strong enough "so that those losses don't matter," said Geithner.
|Donald Trump will remain executive producer on 'Celebrity Apprentice'|
|Carrier to ultimately cut some of jobs Trump saved|
|Nordstrom's $85 leather-wrapped rock sold out online|
|Pantone color of the year 2017: Greenery|
|Trump sold his stocks. What about his hedge funds?|