A day after Senate bipartisan talks on financial reform collapsed, Treasury Secretary Timothy Geithner sought to revive hope that Congress can still complete a bill to overhaul financial rules.
It is in the U.S. domestic interest to make the financial system more stable and to show others that the United States can set an example for action in the wake of the financial crisis, he told a U.S. Export-Import Bank conference.
"It is very important to our economic interests that we play a leadership role in shaping the basic reform structure around the world," Geithner said.
"If America cannot demonstrate it's able to act and reform our markets here, then other countries are going to decide to go their own way on reform."
On Thursday, Senate Banking Committee Chairman Christopher Dodd said an effort to reach a bipartisan pact with Republican Sen. Bob Corker on a financial reform bill was over.
Dodd said he would unveil his own proposals on Monday.
Geithner showed no dismay over the end of bipartisan efforts in the Senate to shape a bill, which some analysts had described as a setback.
"We've got a big imperative to try to get a strong bill in place today and I'm very confident that we're going to be able to do that," Geithner said. He added: "I think you're seeing Sen. Dodd run a very effective process trying to build consensus on a strong bill and I hope we get this done quickly."
The U.S. Treasury chief directed strong words toward the banking industry when asked what exporters might be able to do to expedite the legislative process to set clearer rules for behavior by financial firms.
"I would say 'Don't leave it to the banks,'" Geithner replied, noting that businesses and consumers were "innocent victims" of the financial crisis. "They suffered from a bunch of terribly unacceptable practices by parts of the financial system."
The U.S. economy is emerging from recession more quickly than many of its trading partners and now has an opportunity to make investments in education and other areas to become more competitive, Geithner said.
He cautioned that while the economy was gaining momentum, it needs time to recover fully from recession and said there were still problems stemming from the fact that countries like China are overly reliant on exporting to boost their growth.
"If you care about exports, as the president does, you understand it's about opening markets to American producers ... it's about making sure that countries around the world are moving from the kind of export investment-led strategies of the past — countries like China — and are moving more toward strategies that rely more on domestic consumption and domestic demand-led growth," Geithner said.
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