Here's the transcript of Tim Geithner's interview on CNBC with John Harwood. In it he discusses banker greed, the AIG memos (he maintains he had nothing to do with them), and whether the new bank tax is punitive. We've highlighted the key parts

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JOHN HARWOOD, host: Mr. Secretary, thanks so much for joining us.



Secretary TIMOTHY GEITHNER: Absolutely.



HARWOOD: The president, in laying out this financial crisis responsibility fee today, talked about massive profits and obscene bonuses being paid to Wall Street executives. Is that an indication that there's a good bit of politics in this initiative by the administration at a time when you guys are under a lot of pressure?



Sec. GEITHNER: I don't think so. You know, there's a legal obligation in the law that authorized the financial rescue that says the president is obligated to propose to the Congress a way to make sure that the costs of the crisis don't add to our debt and deficits in the future. And we thought it was economically sensible, fair, good policy, legally necessary to propose now how to make sure that the costs of this are not born by people who were innocent victims of all the--all the wreckage.



HARWOOD: Jamie Dimon said you shouldn’t have tax policy that punishes individual firms.



Sec. GEITHNER: This policy is not designed to punish. It's designed to meet the simple, practical, legal obligation, and we're doing it in a way, I think, it makes economic sense because we're doing it in a way that is, in effect, a tax on leverage, it's a tax on risk in some ways, and it's borne by the people that benefitted most from the crisis. That seems fair.



HARWOOD: Do you have any concern that this tax will have any damaging effect on the economy, on lending? And if not, why not make it higher, since we've got a rather large budget deficit right now?



Sec. GEITHNER: Let me start with the second. The ultimate costs of solving this financial crisis are going to be dramatically lower than anybody thought was possible. But a financial crisis like this caused a lot of damage, there's still going to be some cost. But the legal obligation is to make sure we cover that cost. So, conservative estimates, the cost of the crisis may be in the range of $100 million, slightly higher. So this is designed to make sure we cover those costs. That's why we did--that's why we did the size this way.



HARWOOD: Well, what about the deficit?



Sec. GEITHNER: Yeah. On the...



HARWOOD: Well, you could make it higher and in addition to repaying the TARP, making taxpayers whole, you could narrow the deficit.



Sec. GEITHNER: You could, again. But, again, this was designed to meet that simple, legal test, economic test. It's a sensible way. Now, it's designed very carefully to avoid any risk that this does damage to lending to recovery. And of course that's the most important thing we do now. And I don't think this has any risk of that.



HARWOOD: You know Wall Street very well. Let me ask you a question that I think a lot of Americans ask when they hear the president talk about obscene bonuses, and this is something that we've been discussing for some time. Is there something morally corrupt about Wall Street institutions and the people in them?



Sec. GEITHNER: I tell you, I believe personally that what you're seeing happen across the financial system, what you saw happen that caused the crisis, even what you see now happening, is just causing a huger damage to basic trust and confidence of Americans in the fairness of our system. It's just very hard for people to understand with unemployment at 10 percent, you know, with millions of Americans--this is the United States of America--with millions of Americans on food stamps, worst recession in almost a generation, that you could see compensation practice produce such huge returns to people who were at the center of this mess. It is unexplicable. People cannot understand why it is fair. And...



HARWOOD: But you understand because you know this culture. Why is it happening?



Sec. GEITHNER: I don't--I don't--I don't understand it, really. I really don't understand it. And I think--but what it underscores is why it is so important to make sure that we put in place tougher rules, the kind of reforms that'll make sure that we can wake up in the morning and tell the American people that we have done what is necessary to protect them from the risk of this happening again.



HARWOOD: Is it pure greed?



Sec. GEITHNER: John, it's a complicated thing. I don't--I don't know how to explain it. I can't explain it, I don't understand it, and I think it's very important for those people running these firms, for their boards of directors, for their shareholders, to work very hard to try to earn back some basic sense of trust and confidence of the American people. I think it's very important to do that. And I think, as part of that, they need to not just make sure they're making loans again to businesses and communities, helping solve the housing crisis, but they are working to support a package of strong reforms in the financial system that'll be better for the country as a whole.



HARWOOD: As you know, you've been asked to testify before Congress about some memos that came out, Congressman Issa released regarding AIG and advice the New York Fed gave to not disclose the full repayments to some counterparties of AIG. Now, I know you've said that you--or your spokesmen have said that you were not involved in those memos. But did you agree with the advice in the memos? Was it sound advice?



Sec. GEITHNER: You know, I haven't looked at those memos, actually. I wasn't involved in that decision. But I do think the Fed--the Fed did disclose all that information subsequently. I think they made the right thing disclosing it. It's important for the American people to see all that information. But you know, John, what this is about is is a deep sense of anger and frustration that the government thought it was necessary to come in and prevent AIG from failing. That was a hugely consequential decision, a very offensive decision to most people. Deeply offensive to me, too. But it was necessary to do. And we did it in a way that I believe was not just least cost to the taxpayer, best deal for the taxpayer, but helped avoid much, much more damage than would have happened without that. If we could have done it differently, we would have done it differently. But this was the best way to do it.



HARWOOD: You still believe it was the right thing to pay counterparties 100 cents for the dollar?



Sec. GEITHNER: Oh, absolutely. Again, the way--this is a tragic failure in the system, and we had no effective legal means to step in and prevent default without doing what you said, helping this firm meet all its legal obligations. That's why at a centerpiece of the president's reform proposals is to give the government the tools to unwind, dismember, break up, sell these institutions without the taxpayer being put in the position of having to absorb their losses. That's the basic--one of the most important reasons why we have to get reform in place. We had no choice at the time other than to do this. And I'm, personally, very confident it was the right thing to do, and we did it in the best way possible for the American people.



HARWOOD: Will you testify before that committee of Congress that has invited you, and will you testify before the Truth Commission looking into the causes of the crisis? And what do you...



Sec. GEITHNER: Yes.



HARWOOD: ...hope to learn from that commission?



Sec. GEITHNER: Yes and yes. In fact, I spoke to Chairman Towns last week. I told him I would be happy to come testify. Of course, we worked very closely with him and his colleagues to make sure they had the full information. What--the role they're playing in our system is a very important role, and I respect and honor that. The Financial Crisis Inquiry Commission is also doing a very important thing. You know, I think a test of any serious country is you ought to be able to step back and take a cold, hard, independent look at what caused this, what were the failures in policy across--that caused this, because to do that, to fix the system, you have to go through that process. So I think what they're doing is very important. I've met with the commission twice already, and I very much look forward to the chance to meet in public hearing with them in talks of the cause of this.



HARWOOD: What do you want to discover through that commission? What do you think you don't understand about the crisis already?



Sec. GEITHNER: Personally, I feel like I have a good sense of what the principal failures were. But you know, you want to make sure you look at these through a second set of eyes, independent eyes. You want a range of perspectives to bring to bear, and that's one thing a commission can do. And I--again, I think it's a very helpful process.



HARWOOD: Will you have any mistakes to admit to, invested in?



Sec. GEITHNER: Oh, I--I'll tell you, I've said this before and I think it's important for people to understand. I think there were systematic failures by people making policy. I think in--across the board. The Fed, as well, made policy failures in that case. And even though I was part of, at the New York Fed, doing a whole range of important things that helped made the system stronger, less vulnerable to this, we did not do enough, were not able to do enough, did not move soon enough. And that's why I personally feel such a strong obligation to make sure we're working to put in place financial reforms that'll fix these problems.



HARWOOD: We'll move to a couple other economic questions. The Congress, as you know, is debating new jobs legislation. Talking about in the range of $200 billion to spend. Can we afford to spend $200 billion, given the size of our deficit, and how much impact on the unemployment rate could you make this year?



Sec. GEITHNER: I think we can. I think there's a very good case, even though the economy is healing and we're seeing growth now, I think there's a very good case for making sure we support a targeted set of initiatives to help people get back to work more quickly. And so, as long as it's well-designed, it's going to have the maximum impact on that objective, which is creating jobs--more jobs more quickly. I think it's the necessary and appropriate thing to do for the country, and we can afford it.



HARWOOD: And how much impact could you make on the unemployment rate? Ten percent now; some people think it'll still be 10 percent in November.



Sec. GEITHNER: Well, again, I think what we're going to focus on, John, is how many jobs is the American economy creating on net? Most business economists, most businesses think that we're just a few months away now from seeing the economy start to generate jobs again for the first time, which is, again, much earlier than many people would have thought possible. And again, we'd like to have that happen sooner with more strength, as much as possible.



HARWOOD: What, in your view, is the risk of a double-dip recession? Is that gone? Do we know now that we're not going to fall back into recession?



Sec. GEITHNER: Again, we have to work very hard to prevent that risk, reduce that risk. I think--I would say a broad consensus of people running companies now is they are more confident today, much more confident today, that you're going to see an economy growing at a moderate pace over the next few years. We'll just going to come out of this in a self-sustaining way. But again, we want to improve the odds of that, and I think that's why there's a case for targeted measures to help reinforce this process of recovery.



HARWOOD: There's some talk that to avoid economic damage, perhaps to avoid political damage, the administration might consider a temporary extension of the Bush tax cuts on those highest incomes, which the president campaigned against.



Sec. GEITHNER: We have not...



HARWOOD: Is that under consideration?



Sec. GEITHNER: No, it's not under consideration. That's nothing we've contemplated, and I don't think that's a necessary act. Again, we are committed to make sure that we leave in place the tax cuts that benefit the vast majority of Americans and so that we are again doing everything we can to help heal this economy, get people back to work, repair the damage, the really extraordinary damage caused by this recession.



HARWOOD: So the administration would not go along with that if Congress suggested it?



Sec. GEITHNER: I do not think that would be good policy for the country, and I don't think it's a necessary thing to do.



HARWOOD: Google has said it may pull out of China in response to some attacks on its system. Google has said they believe the attacks were either launched by the government or condoned by the government. Is that also what the administration believes? And, if so, what does it say about the US/China economic relationship?



Sec. GEITHNER: Personally, I have no knowledge--I'm not aware of the basic concern underlying their judgment. And, you know, they'll have to decide what's important for them to do. You know, we have a lot of difficult economic problems with that--with that country, with China, and we are working very hard to make sure that we're protecting intellectual property rights, that we're expanding access for American firms, that we're working with China to solve a lot of complex problems we face across the country, not just climate change and not just our national security threats in Iran and North Korea, but a broader range or other issues where we need to work together. But we're not--we're going to disagree on things. We're going to have areas of tension in our relationship. And work very hard--we're going to work very hard to make sure we're protecting American interests in that relationship.



HARWOOD: And how concerned are you about this attack in particular and what effect it might it have on the future of the Internet?



Sec. GEITHNER: Again, that's something, John, I haven't spent a lot of time looking at. But I know it's something that we're focused on across the administration. But there are better people to speak to that issue.



HARWOOD: Let me just close with this. You know, you've gotten attacked constantly since you were nominated--tax issues, AIG bonuses, people say you're too on the left, that you're too cozy with Wall Street on the right, that you're part of excessive intervention in the economy. How does it feel to be on the receiving end of those kind of barbs? And do you expect to be here throughout the president's first term or might you leave after the elections, which sometimes happens in administrations?



Sec. GEITHNER: This is a challenging job. Of course, I knew it was going to be a challenging job, and it was necessarily going to come with a lot of challenge and criticism because we're doing consequential, difficult things, and people are going to disagree with what our judgments are with what's necessary. But, you know, my job is to make sure I'm doing everything I can to help the president solve the problems we inherited. And we are doing a very effective job of starting to repair the damage, not just at much lower cost, much lower damage to the American people, to the taxpayer, but without having the government take on unnecessary responsibilities. You know, again, we work very hard, John, to take the vast bulk of the money my predecessor was forced to put in the banking system, back, so that the government is not in the business of any long-term engagement where that is not necessary to do. So again, we're trying to make the best judgments of what's necessary for the country. Those are going to be unpopular to many people, people will disagree with them, but my job is to give the president the best advice possible. And it is a great privilege for me to do that.



HARWOOD: What do you say to people on the left who say, Geithner's totally in bed with Wall Street'?



Sec. GEITHNER: Yeah. I mean, it's the first time in my life I've had the judgments I've made go through to the prism that I come from that world. It's interesting. I think when I came into office, I think most people believed I spent my life working in an investment bank. I was in a congressional hearing, oversight hearing once, where one of the members said, `But Mr. Geithner, you're a banker.' I said, `Actually, I was not a banker.' They said, `Well, but you were an investment banker.' And I said, `No, I've never been an investment banker.' They said, `Well, but you look like a banker.' And it

is--you know, I've spent my life in public service. I grew up largely outside the country, so I don't understand why that perception existed at the beginning. And I would never ever put myself, put the president, put my department in the position of having any of the judgments we made vulnerable to the perception we were going to do anything other than what we think was necessary in the broader best interests of the country.



HARWOOD: Have you ever considered, in response to these calls, resigning your job?



Sec. GEITHNER: Oh, well, that's the judgment the president has to make. You know, as long as I have the chance to help him do this, fix these problems, I'll be honored to do it.



HARWOOD: So no desire to leave? As far as you're concerned, as long--everybody serves at the pleasure of the president, but as far as you're concerned, that could be throughout the first term, not--you're not looking to leave at the end of it?



Sec. GEITHNER: You know, John, that is his judgment to make. You know, he asked me to come here and help him solve a bunch of complicated problems. I'm working very hard to do that. We're making a lot of progress. But, you know, this caused a lot of wreckage, a lot of damage. We've got a ways to go. And our job is to make sure the American people understand we're going to keep working to help heal what is broken and put this economy on a stronger footing.



HARWOOD: Mr. Secretary, thanks for joining us.



Sec. GEITHNER: Nice to see you.



HARWOOD: Appreciate it.



Sec. GEITHNER: Thanks for having me.