Geithner on the Record: Toxic Assets

as it should, because our systems are different, but on the basic premise that you want to move aggressively, alongside fiscal stimulus to make sure financial systems are working better, there’s broad support for that.

Yes.

Q On the pricing question again, sir, you’ve said the (inaudible) securities are the core of the problem, and moving them is –

SECRETARY GEITHNER: Loans and securities.

Q Loans and securities, critical. Can you tell us just a little bit about the lack of clarity? Is it because — on the pricing — is it because you haven’t quite –

SECRETARY GEITHNER: You mean the features of what the exact price is?

Q Well, the –

SECRETARY GEITHNER: We’re using a — let’s just step back for a sec. What we’re using is a market mechanism to establish the price. So people will have to compete for the ability to take advantage of the financing program and the capital in order to do that.

So, you know, until you see that process work, you won’t know where the market will clear.

Q The point is, they — the potential investors — can’t tell how much it’s going to cost them from the documents you’ve put out because the terms of the loans are still not –

SECRETARY GEITHNER: We’re using a established framework we used for laying out all these programs, where we put out broad details of terms, people have a chance to react, those evolve so we figure out what’s the best mix for the interests of the taxpayer. We’re using the same basic approach.

And the mechanism here, again, on the loan side is based on an established mechanism. The FDIC has a lot of experience in operating and running auctions in these process. And I think that, you know, again, you’re going to find a lot of people who will say that we’d like the government taking on more risk, or they’d like us to provide — put more risk on the table in this context.

But I think that this is a — you know, we’re laying out enough details on broad terms that we can get this process to the point where we’re operational relatively quickly.

Q Just to follow up. So what you’re saying is you have enough detail in hand to do these deals on a case-by-case basis, is that it, rather than having a full set of terms that you roll out for everybody to look at all at once, is that it?

SECRETARY GEITHNER: No, we’re laying out enough detail on terms that we can get to the point where we can make these operational quickly. But, you know, you have to lay out a framework so you can have a little bit of iteration and flexibility, just as — I mean, again, just to use other models, just as the FDIC does when it runs its basic programs; just as the Fed does when it designs its basic programs; just like we did on the term asset-backed securities lending facility that was launched last week. You know, there’s just a — there has to

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