Many Americans, however, are seeking immediate relief. With an unemployment rate above 15%, hordes of African Americans have been among the most battered by economic forces. The Center for American Progress, a nonpartisan research institute, reports that “as the economic recovery deepens and the labor market recovers, communities of color will have to climb out of a deeper hole to regain the same level of economic security as they had before the crisis.”

Against this backdrop, Editor-in-Chief Derek T. Dingle talked with Treasury Secretary Timothy Geithner to gain answers to our readers’ questions about the economy. In this exclusive interview held after the State of the Union address, the two discussed, among other topics, financial reform, small business lending, and job creation. The following are edited excerpts:

What is the current state of the American economy?
We’re making progress but we have a lot of challenges. We have very high levels of unemployment still and we’ve got these very large, unsustainable long-term deficits. What the president did [in the State of the Union speech] was to lay out a very optimistic, very confident vision for how we meet those challenges and what we need to do in the United States to make sure that we’re making more progress, creating a stronger economy, and going back to living within our means.

The president’s plan calls for investments in innovation, education, and infrastructure. Given the federal budget deficit, how can the government pay for that?
The things we need to do to make sure that we are creating more things in the United States, that we’re rebuilding infrastructure and we’re educating our children, those are things that we can afford as a country. Of course, we have to make sure we can demonstrate to the American people that we can spend less on less important things [and]

spend their taxpayer resources much more wisely. If we do that we can afford to make those targeted investments. They have huge returns to the American economy in terms of higher growth rates, more opportunities for Americans, more income growth for Americans.

The president has had major battles with Congress
over budget priorities and deficit reduction.
It’s not complicated to figure out how you reduce the deficit. What’s complicated is figuring out how to do that in way that’s going to be good for the economy, not kill future investment, growth prospects, and in a way that’s going to be fair to working families [and] middle-class Americans. And that’s a debate where there are big differences between the president’s views and [those] of people in Congress, some on both sides of the aisle, but particularly Republicans. We have to figure out a way to resolve those differences. The president said, ‘Nothing is going to pass Congress unless Democrats and Republicans agree.’ So we have to figure out a way to get people on both sides of the aisle who want to solve problems to come together.

Why does the corporate sector still lack
confidence when it comes to hiring?
The economy went through the worst crisis we had seen since the Great Depression. It was a shattering blow to the basic confidence of Americans and American business. It’s going to take some time for people to be more confident that it is definitively behind them and make them believe that they can take a risk again on the strength of the American economy, but that’s happening now. If you look at how businesses are spending their resources now, private investment grew at a roughly 10% annual rate last year, much more rapid growth than the overall economy as a whole. So you’re seeing businesses start to put their money to work again, start to take a risk again, and in doing that they’ve added back 1 million jobs in the last 12 months. I think you’re going to see the pace of job creation now start to accelerate as growth gets stronger.

How do you encourage more lending to small businesses?
The president put in place a sweeping, very creative, comprehensive set of measures and a bunch of tax incentives for small businesses. You’re starting to see for the first time the rate of growth of lending by banks to small businesses starting to strengthen. If you talk to banks across the country, they’re saying they’re starting to see more demand from small businesses for lending, which is good. That’s a sign that they think there’s going to be more demand for their products. We have a program in place that gives states substantial resources to put more ammunition into their lending programs for small businesses.

We want to make sure that if someone has an idea [and] wants to create a new business, they can get funding. If someone has an existing business and wants to expand, we want to make sure they can find the financing.

The change in capital requirements has hampered financial institutions like BE 100s banks.  How do you reconcile new rules so community banks can start lending?
[In] the financial reform legislation Congress passed last year, we were very careful to make sure we protected small banks from the risk that they would be burdened by new regulations that would get in the way of them trying to help their Main Street business customers. I think when you are having financial crisis there is always a risk that supervisors, examiners, regulators who may feel like they weren’t tough enough in the good times, tend to try to overcorrect a little bit after the boom. We’ve tried to make sure examiners are not overdoing it, that after being a little too soft they don’t shift to be too tough and therefore get in the way of helping the economy recover.

What is the status of the consumer protection bureau
and other measures related to financial reform?
The most important thing was to establish in one bureau in the federal government a set of authorities to protect consumers at a national level. We’re now in the process of trying to build up that agency. [Its head] Elizabeth Warren is focused on two important initial things: making sure that we simplify for people who want to buy a house or refinance their house the mortgage disclosure form [so] they can better understand the terms of their loans. She’s also focused on trying to simplify credit card agreements so that, again, consumers find it easier to get better terms and harder to be taken advantage of. This new bureau is going to meet the basic challenge we all have, which is to fix this system that did a very bad job of protecting average Americans.

What are the next steps to curb the
high incidence of foreclosures?
The principal thing that’s driving the rate of foreclosures across the country, and it’s not surprising, is the high levels of unemployment. If someone loses [his or her] job, or your spouse loses his or her job, you’re going to find it hard to meet your monthly payments on your house until you get back to work. Until we get the economy to grow more rapidly and the unemployment rate down more definitively, it is going to be hard to get the housing market back on its feet more quickly. We’re trying to make sure we reach as many Americans as we can and give them a chance to stay in their house. We can’t reach everybody.

You’re helping those who were considered responsible homeowners and found themselves in this situation from no fault of their own?
Exactly. Not only that, [but] you had people who were taken advantage of and we need to help them out. You have people who were completely innocent victims who were responsible [about] how they borrowed, bought a modest home, but who saw all their neighbors lose their homes. So house prices in their neighborhood fell very, very sharply. That hurt them a lot too. Again, that’s why it’s so important that we do what we can to get the economy growing again and get house prices rising again and try to reach people who really deserve to be helped stay in their homes.

The Center for American Progress recently recommended that the Obama administration develop targeted programs for communities of color. Is the administration developing such programs?
The impact [of a recession] falls much more severely on African American communities [and] urban areas. The programs that we designed are designed to go to where the needs are greatest. We have a program in the housing market which gives 18 states at the center of the crisis still a substantial amount of resources that they can use to help people who are unemployed and risk losing their home or give people greater principal reduction on their mortgages. We think that’s a good strategy. We’ve also tried to put substantially more resources into the Community Development Financing Program and into our New Market Tax Credit Program so we are directing resources where they’re needed most and where in the past we’ve seen they have huge benefits in helping communities get back on their feet more quickly.

The president always talks about looking for new ideas. Have you reached out to these communities for advice and input?
We do. One thing we’ve tried hard to do is to make sure we’re listening to anybody who comes in with an idea. The people who have the most impact on the decisions we make come not just with a problem or challenge but they say here’s the best thing you could do to help us to fix that problem. The programs we designed in the housing area, for small banks [and] for small businesses reflect that input. Part of what we try to do is direct more to the states and local communities because, in many cases, they’re going to have a better feel for what works than we can have here in Washington. We try to get the balance right.  

President-elect Barack Obama announces New York Federal Reserve Bank president Timothy Geithner (L) as his choice for treasury secretary, Christina Romer as Council of Economic Advisers Chair, and Lawrence Summers (R) as director of the National Economic Council Nov. 24. (Source: Getty Images)

Promising that he would do all within his power to right the economy, President-elect Barack Obama today named his economic team for his new administration.

Obama nominated Timothy F. Geithner, the president and CEO of the Federal Reserve Bank of New York, as the secretary of the treasury. Obama also tapped former Treasury Secretary Lawrence H. Summers to head the National Economic Council.

Obama said he would make good on commitments President Bush and current Treasury Secretary Henry Paulsen have made to rescue financial markets and urged the incoming Congress to immediately pass a major stimulus package to restore growth and create jobs.

“Right now, our economy is trapped in a vicious cycle: the turmoil on Wall Street means a new round of belt-tightening for families and businesses on Main Street – and as folks produce less and consume less, that just deepens the problems in our financial markets,” Obama said at a press conference. “These extraordinary stresses on our financial system require extraordinary policy responses.  And my administration will honor the public commitments made by the current administration to address this crisis.”

Obama also reiterated his recovery plan that woudld stabilize the U.S.’s financial system, gets credit flowing again, “while at the same time addressing our growing foreclosure crisis, helping our struggling auto industry, and creating and saving 2.5 million jobs – jobs rebuilding our crumbling roads and bridges, modernizing our schools, and creating the clean energy infrastructure of the twenty-first century.”

The incoming president said Geithner’s vast experience will allow him to quickly take charge of the current financial crisis, which is no “longer just an American crisis, it is a global crisis – and we will need to reach out to countries around the world to craft a global response.  Tim’s extensive international experience makes him uniquely suited for this work.  Growing up partly in Africa and having lived and worked throughout Asia; having served as Under Secretary of the Treasury for International Affairs – one of many roles in the international arena; and having studied both Chinese and Japanese, Tim understands the language of today’s international markets in more ways than one.”

Of Summers, who famously clashed with Cornell West while they were both at Harvard, Obama said that Summbers “was a central architect of the policies that led to the longest economic expansion in American history, with record surpluses, rising family incomes and more than 20 million new jobs.  He also championed a range of measures – from tax credits to enhanced lending programs to consumer financial protections – that greatly benefitted middle income families.”

At the press conference, Obama offered up criticism of the Big Three automakers, which are seeking $25 billion in government assistance. He said he was surprised the representatives didn’t have a better plan when they appeared before Congress last week seeking aid.

Obama also nominated Christina D. Romer as director of the Council of Economic Advisers, Heather A. Higginbottom as deputy director of the Domestic Policy Council, and Melody C. Barnes as director of the Domestic Policy Council.

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But seriously, yesterday  investors were braced for another dismal performance of a market that was in a 620-point trading range. However, President-elect Barack Obama gave the financial markets just the tonic it needed to end the week: a rally.

How did he do it? He reportedly nominated highly-respected New York Reserve Bank President Timothy F. Geithner as his administration’s treasury secretary. After news hit Wall Street, the Dow rose nearly 500 points in the final hour of trading, gaining 6.5% to close above 8,000. The potential nomination of Geithner signaled to investors that Obama will move quickly on the execution of the last stages of the $700 billion financial bailout, which for weeks has been considered by many observers to have been bungled by the Bush administration’s indecision and missteps.

Thus far, half the funds of the Troubled Asset Relief Program have been deployed, fueling confusion and frustration within the nation’s financial community. Also, what appeals to investors about Geithner is the fact that as New York Fed chief he has participated in such industry-saving acts as the sale of Bear Stearns to JPMorgan Chase and the multibillion dollar rescue of AIG, one of the world’s largest insurers. Moreover, he is an experienced hand at Treasury who has worked for five secretaries, including serving as the right hand of Clinton Treasury Secretary Lawrence Summers who, in fact, was reportedly on the short list for the post.

The almost-certain move, along with other appointments, clearly indicates that Obama will be ready to lead on Day One – a criticism he dealt with repeatedly during the primaries and general election.  So far, the president-elect’s transition has been considered the smoothest in history and, if the rumor mill is to be believed, he has proven to have exercised unassailable judgment in his selection of his cabinet, including Eric Holder as attorney general, former Sen. Tom Daschle as health and human services secretary, Bill Richardson as commerce secretary and Sen. Hillary Clinton as secretary of state.

A student of Abraham Lincoln, the president who preserved the union during the Civil War, Obama is believed to be building “a team of rivals,” pundits say. But his legacy may prove to be more aligned with Franklin Delano Roosevelt, the nation’s chief executive who moved the country out the Great Depression by remaking America. Obviously, it’s too soon to judge Obama as President. That assessment will come after Jan. 20. But with the likely appointment, Obama’s stock has definitely risen.

Derek T. Dingle is the editor in chief of Black Enterprise magazine