May 25, 2010
Geithner to confer with European leaders
WASHINGTON (AP) -- Treasury Secretary Timothy Geithner will meet with European finance officials this week to review a $1 trillion rescue package that is being assembled to help stem the spreading debt crisis.
Geithner is to talk Wednesday in London with Chancellor of the Exchequer George Osborne, who has just taken office in the government of new Prime Minister David Cameron. They plan to hold a joint news conference after, Treasury said.
He will also meet with Mervyn King, head of the Bank of England, and Vince Cable, the new government's secretary for business and trade, Treasury said.
Afterward, Geithner flies to Frankfurt for a working dinner with Jean-Claude Trichet, the head of the European Central Bank. He will wrap up the visit with a meeting in Berlin on Thursday with German Finance Minister Wolfgang Schaeuble.
A senior Treasury official, who spoke on condition of anonymity because he was not authorized to speak publicly, said Geithner wanted to discuss with Trichet and Schaeuble "the package of measures designed to promote confidence in Europe."
Geithner's meetings should be viewed as one in a series of discussions with America's partners in the Group of 20, the official said.
The G-20 is a collection of major industrial countries and fast-growing developing countries such as China, Brazil and India. It has taken the lead in coordinating a global economic response to the financial crisis that followed the collapse of Lehman Brothers in the fall of 2008.
Treasury officials played down market speculation that Geithner's meetings would produce coordinated action, such as an intervention to bolster the sagging euro. On Tuesday the euro sank close to a four-year low against the dollar.
The United States last intervened in currency markets in 2000. It was a surprise move to bolster the euro, which was coming under pressure after its introduction in early 1999.
The George W. Bush administration did not favor the government buying and selling dollars to influence exchange rates. The Bush administration believed such actions have limited impact on underlying market fundamentals.
Ted Truman, a former top international official at the Federal Reserve, said he would not exclude a joint effort to bolster the euro. But he's not expecting such an announcement during Geithner's trip.
"It would be up to the Europeans. If they asked us to intervene to support the euro, I would be surprised if we didn't cooperate," said Truman, now a senior analyst at the Peterson Institute for International Economics, a Washington think tank.
Economics professor Sung Won Sohn said the Obama administration had to be concerned that the $1 trillion rescue package for debt-burdened European countries has not calmed markets.
"I am sure that one of the reasons for Geithner's trip is to find out what else can be done to calm market jitters," said Sohn, a professor at the Martin Smith School of Business at California State University.
The Treasury Department announced Geithner's trip last week after a rough day of trading stirred by the growing concerns that the debt crisis would spill into less-indebted European countries.
His trip to Europe is coming after two days of high-level talks with Chinese government officials.
At the conclusion of the Beijing talks, Geithner said U.S. and Chinese officials were united in a desire to help Europe.
"We agreed to support the strong programs of policy reforms and financial support now being undertaken by the nations of Europe," Geithner said at a news conference before departing for London.
