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By Glenn Somerville
WASHINGTON (Reuters) - U.S. Treasury Secretary
Timothy Geithner on Monday promised not to swamp Wall Street
with red tape and vowed to move quickly to put in place new
rules for the financial marketplace to dispel uncertainty.
In return, he urged big banks to step up and make loans
more readily available to businesses.
Amid rising doubt about the recovery's durability and
Washington's economic stewardship, Geithner traveled to New
York to meet Mayor Michael Bloomberg and captains of industry
to calm fears that new rules will crimp their competitiveness.
He said the administration would seek to streamline
regulation and not simply "layer new rules on top of old".
"We will move as quickly as possible to bring clarity to
the new rules of finance," he said in remarks prepared for
delivery at an event sponsored by New York University. "We will
not risk killing the freedom for innovation that is necessary
for economic growth."
But Geithner said financial firms have a responsibility
"Demonstrate to your business customers -- large and small
-- that after running for cover during the peak of the crisis
you are ready and willing to take a chance on them again," he
President Barack Obama signed a 2,300-page package of
financial regulatory reforms into law last month but it is
largely a work in progress since rules to implement it still
need to be drawn up.
The sweeping reforms, fought bitterly by banks, were
prompted by lawmakers' anger at Wall Street's role in
precipitating the 2007-2009 financial crisis.
HURRY TO TAMP DOWN UNCERTAINTY
Treasury is on a drive this week to sell the financial
reform package, sending out top officials to beat the drum for
the benefits that heightened consumer protection will bring.
With the political season ahead of November congressional
elections heating up, Republicans have argued a cloud of
regulatory uncertainty is causing businesses to delay hiring and
making a bad economic situation worse.
A Reuters-Ipsos poll last week pointed to trouble for
Democrats in the Nov. 2 elections. It showed a majority of
Americans think the Obama administration has not focused enough
on job creation. The U.S. unemployment rate stood at a lofty
9.5 percent in June.
Geithner said Treasury will try to speed up the rule-making
process. That would reduce the period of uncertainty for banks
and other businesses but it would also mean lobbyists for the
financial industry would have less time to influence the rules.
"The rule-writing process traditionally has moved at a
frustrating, glacial pace," he said. "We must change that."
Geithner extended an olive branch to Wall Street banks,
saying it was necessary to balance needed protections for
consumers against businesses' drive to create new products and
RULES HAD TO CHANGE
Geithner said the financial overhaul was necessary.
"Our system allowed too much freedom for predation, abuse
and excess risk, but as we put in place rules to correct for
those mistakes, we have to strive to achieve a careful balance
and safeguard the freedom, competition and innovation that are
essential for growth," he said.
He suggested there could be benefits for business by
eliminating some old rules, though he didn't publicly specify
"Alongside our efforts to strengthen and improve
protections for the economy, we will eliminate rules that did
not work. Wherever possible, we will streamline and simplify,"
Geithner met privately with executives from the finance
industry, the retail sector and real estate ahead of his New
York University address. Among those invited to the lunch were
Laurence Fink of BlackRock, Donald Marron of LightYear Capital,
Eric Mindich of Eton Park Financial Management and James Tisch
of Loews Corp.
(Reporting by Glenn Somerville and Tim Ahmann; Editing by Diane Craft)