Geithner answers some tough questions from the Digg community
The questions were culled from submissions to social-networking site Digg.com and presented to Geithner by Alan Murray, deputy managing editor for The Wall Street Journal.
One Digg member, identified as larryjr88, asked the second most popular question, with 729 "diggs": whether Geithner's previous and current relationship with Goldman Sachs didn't pose a clear conflict of interest, or as larryjr88 put it, "a textbook example of political corruption." Geithner, laughing briefly, noted that he was never employed by the investment bank.
In fact, Geithner said, he spent nearly his entire career since leaving school working in the public sector, and had never had any relationship with Goldman Sachs.
Asked by Murray how such misinformation could seemingly become truth, Geithner said there's no explaining how rumors erroneously become facts. "These things get some salience and currency; it's kind of crazy," he said.
Still, he said, the question proved an important point -- that Americans need to have trust in their public officials.
"It is very important that people understand that the people that hold these jobs . . . need to be held to the highest standards of integrity, and we would never, ever have people in these jobs who would do anything for the benefit an individual company or an individual firm," Geithner said.
The most popular question, with 1,133 diggs, asked why the Federal Reserve Bank, which works with Treasury in several capacities, has never been audited, the implication being that its actions were less than transparent.
Geithner responded that the Fed is subject to "comprehensive oversight" by Congress and external auditors. Nonetheless, he said, the central bank does and needs to maintain a degree of independence to keep politics from influencing monetary decisions.
"I'm sure many of the people concerned about the Federal Reserve system understand that it would be problematic for the country if you let politicians come in and shape conduct and monetary policy for the country," Geithner said, adding that the Fed's actions today are more transparent than in past years.
Geithner also defended his agency's request to reform laws to prevent financial crises of the sort in which the U.S. now finds itself. Those include, among other things, a provision to create a consumer financial protection agency.
In addressing the economic meltdown that culminated last fall with the collapse of Lehman Brothers, he said the U.S. waited too long to act and didn't have "adequate tools" to address the crisis.
"Those were tragic mistakes," which require that Congress pass reforms that give regulators more power to prevent and manage crises, Geithner said. "And that will require changing a lot of things."