Treasury Secretary Tim Geithner was on Capitol Hill today to testify before separate House and Senate Committees about threats to the financial stability of the country.
Geithner is talking about the first annual report of the Financial Stability Oversight Council (FSOC), which he chairs. The Dodd-Frank law created the FSOC to look for and prevent the kinds of systemic risks that caused the financial upheaval and recession of the last few years.
Secretary Geithner told members of the Senate Finance Committee that U.S. banks have made improvements in their ability to withstand another financial crisis, but that European nations must move "aggressively" to contain their debt.
"The crisis in Europe presents a very significant risk to global recovery," Geithner said, "Europe is so large and so closely integrated with the U.S. and world economies that a severe crisis in Europe could cause significant damage by undermining confidence and weakening demand."
Among the FSOC report's recommendations: that banks and other financial institutions put into place plans to maintain their capital without government intervention, be prepared to respond to interest rate changes, and be more "disciplined" in assessing the credit worthiness of borrowers.
The FSOC includes not only the Treasury Secretary but nine other top economic officials including the Chairman of the Federal Reserve, and the heads of the SEC and the FDIC.
Geithner appeared before the Senate Banking Committee this morning, and the House Financial Services Committee in the afternoon.