Marco Werman speaks with Edward Alden, a Senior fellow at the Council on Foreign Relations in Washington, D.C., about Treasury Secretary Timothy Geithner's remarks earlier today.
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MARCO WERMAN: I'm Marco Werman, and this is The World, a co-production of the BBC World Service, PRI, and WGBH Boston. Today was a momentous one for efforts to reverse the recession. First, Treasury Secretary Timothy Geithner unveiled a plan to cleanse banks of up to $500 billion dollars in spoiled assets. The plan would also support $1 trillion dollars in lending through an expanded Federal Reserve program. Then, the Senate passed an $838 billion dollar economic rescue plan. That sets the stage for negotiations with the House over the final size and scope of the bill. Edward Alden is a Senior Fellow at the Council of Foreign Relations in Washington. Of these two big pieces of news, Mr. Alden – Geithner's plan and the financial stimulus package being approved by the Senate – which one is a bigger deal as far as you're concerned?
EDWARD ALDEN: Well, I think the new plan announced by Treasury Secretary Geithner is of much more interest and much more concern. We have a pretty clear idea of what's in the stimulus package, but the question of how to rescue the banks and deal with these toxic assets on their books remains the big unknown. And we learned a little bit more today, though not as much as we had hoped to learn.
WERMAN: And do you think the bank bailout plan is bigger news for the rest of the world as well?
ALDEN: Well, no question, because I think, you know, the problems in the banking system are at the heart of this crisis. And unless there is a plan to get US banks back on a sounder footing, then every other element of the recovery package really becomes largely irrelevant.
WERMAN: And if you were an official with a foreign government and looking at this news today, what stands out for you?
ALDEN: Well, I think what stands out unfortunately is that the Obama administration has still not given us a clear set of guidelines as to how this bank bailout will proceed. At the heart of the issue is the question of what to do with these bad assets that are on the books of so many of the banks in the United States and abroad. It's difficult to know how to value these assets, and that's the problem that this administration is struggling with -- very much as the Bush administration did. And there's not a lot of evidence that they've made significant progress in figuring that problem out.
WERMAN: Well, let's hear what the Obama administration had to say today, specifically Secretary Geithner, when he unveiled the plan today. Here's Secretary Timothy Geithner earlier today.
GEITHNER: Later this week, I'm going to be traveling to meet with the G7 Finance Ministers and central bank governors in Italy. And there we will start the process of working with our international partners to ensure that we're working together to help strengthen the global economy and to help repair the global financial system.
WERMAN: Edward Alden, first of all, is this the kind of language that the rest of the world was hoping to hear from Secretary Geithner today, do you think?
ALDEN: Well, I think, you know, there's no question that the rest of the world is looking for a signal that the United States wants to operate in concert with them in devising and implementing solutions to this crisis. But the onus remains upon the United States to lead. The crisis funneled out from here, and I think the rest of the world is looking for the US to provide a path out of the wilderness, and the administration, I'm afraid, has not yet done that.
WERMAN: I'm wondering is the American government thinking at this point – is the White House thinking at this point about how this is going to affect the global economy? I mean, I can imagine at the White House, they're saying “first talking point, American jobs. Then we can tout how this may help the rest of the world.â€
ALDEN: There's an awareness clearly in the White House, that this is a global problem and the global economy needs to recover alongside the US economy, that both are absolutely essential. In the context of the Senate bailout package, there's been quite a bit of international concern over what are rather small provisions, in some respects. Provisions requiring government infrastructure spending to be targeted at American companies, and new language that was added in the Senate bill that would restrict the ability of banks receiving bailout money to hire foreign workers on H1B Visas. There's been a lot of international concern over these measures because there's fear that they send a signal that the United States really is going to turn inward and not worry about the impact that its measures have on the rest of the world.
WERMAN: How much is global goodwill toward Mr. Obama right now, less than a month into his presidency, feeding into these plans? Do you get a sense that, you know, the rest of the world is kind of giving him the benefit of the doubt right now?
ALDEN: Oh, no question. No question. There is a huge desire that he succeed. And in fact there is a collective self-interest in much of the world that the American recovery plan be successful. The United States remains the world's economic engine, and until recovery begins to take hold here, it's going to be very difficult for economies in Europe and Asia and elsewhere to begin growing.
WERMAN: Edward Alden, senior Fellow at the Council on Foreign Relations in Washington. His most recent book is “The Closing of the American Border: Terrorism, Immigration, and Security Since 9/11.†Thanks very much.
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