Geithner to press Sarkozy to end crisis

Dec. 7, 2011 at 3:30 AM
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PARIS, Dec. 7 (UPI) -- The financial crisis will end when investors think they will make a profit investing in governments and banks, U.S. Treasury Secretary Timothy Geithner said.

"Financial crises are ultimately resolved when governments and central banks succeed in creating the conditions that make it compelling for investors to take the risks involved in lending to governments and to banks," Geithner said in Berlin during a crucial week for the European Union that will end with an EU leaders' summit meeting Thursday and Friday.

Geithner, dispatched to Europe for three days by President Barack Obama, said the eurozone currency bloc would need "a sustained commitment of political will" to resolve its troubles.

German Finance Minister Wolfgang Schaeuble, who spoke to reporters with Geithner, acknowledged eurozone shortcomings and said officials understood the high expectations associated with the summit.

"The objective is to send out a clear signal ... which will allow us to restore confidence [in the markets]," he said.

Geithner was to meet with French President Nicolas Sarkozy in Paris Wednesday to press for final, permanent action that would stem the crisis, which U.S. Treasury and Federal Reserve officials say is seriously undermining the U.S. recovery. He was also to meet with Spanish Prime Minister-elect Mariano Rajoy and Thursday with Italian Prime Minister Mario Monti.

A handful of European nations have indicated resentment over U.S. pressure when the United States has its own financial troubles, The Wall Street Journal reported.

Sarkozy and German Chancellor Angela Merkel were due to propose to the summit Friday a plan they worked out Monday to create greater centralized control over European national budgets as a critical step to restoring investor confidence in eurozone debt.

Details of their proposal were expected to be spelled out in a letter Wednesday to European Council President Herman Van Rompuy, who met with Geithner Tuesday and who will chair the summit.

Ratings firm Standard & Poor's Monday put France, Germany and 13 other eurozone governments on review for possible credit downgrades. S&P said Tuesday it might downgrade the rating on the eurozone's bailout fund, the European Financial Stability Facility.

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