UPDATE 1-US’ Geithner confident Europe can contain crisis

(Adds details on Europe crisis, bank swaps desks)

WASHINGTON, May 14 (BestGrowthStock) – U.S. Treasury Secretary
Timothy Geithner said on Friday that he is confident Europe has
the ability and commitment to contain Greece’s debt crisis.

Geithner told Bloomberg Television in an interview that the
European debt reform and rescue program signed earlier this
week was “very strong,” ensuring that deficits would be cut
where needed and lagging economies returned to growth.

“They have the capacity to make that program work, I think
they’re committed to do it. I’m very confident they have the
ability to do that and if they handle that well, then we have a
very good chance of seeing the world economy continue to show
these very promising signs of growth,” Geithner said.

Speaking after conferring earlier on Friday with fellow
Group of Seven finance ministers by telephone about the latest
developments in the Greek debt crisis, Geithner said he did not
agree with concerns about the euro voiced on Thursday by Paul
Volcker, an economic adviser to President Barack Obama.

Volcker said in London that Europe’s debt troubles could
undermine the euro. Despite a nearly $1 trillion aid package
aimed at defending the 11-year-old currency, the euro has
fallen 4.2 percent this week, trading below $1.24 for the first
time since late 2008.

Geithner said it was natural that market participants “want
to see what Europe does, how they act on this very important
program. And they’re going to act and by acting they will have
the chance to earn people’s confidence over time.”

DON’T BLOCK IMF LOANS TO EUROPE

Geithner also said that a Republican proposal to bar U.S.
support for International Monetary Fund loans to European
countries was “absolutely not” reasonable.

He said the United States has not lost “a penny” on IMF
support and it was important to the United States to help their
trading partners and the world economy in times of crisis.

“We’re much stronger as a country because of what the IMF
has been able to do in the past, and we have a big stake in
helping Europe manage through these things and we’re going to
do it in a way that is sensible for the American economy and
the American taxpayer,” Geithner said.

Regarding the financial reform bill now under debate in the
U.S. Senate, the Treasury chief said he believed a
controversial proposal to force banks to spin off their
derivatives swaps trading desks would be modified.

He said the Senate Banking Committee Chairman Christopher
Dodd and the plan’s author, Senator Blanche Lincoln of
Arkansas, would work through “concerns that a lot of people
have” about the plan while preserving strong reforms to make
derivatives markets more transparent and less risky.

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UPDATE 1-US’ Geithner confident Europe can contain crisis