Geithner reiterates need for Congress to raise debt ceiling

In wide-ranging testimony, Geithner also reiterated that he thought it unthinkable that Congress would not raise the ceiling and also touched on issues including the Consumer Financial Protection Bureau created by the Dodd-Frank Wall Street reform measure and how the economy would be affected by a government shutdown.

With the federal government currently only funded through Friday, Geithner said that a shutdown could further hinder confidence in the economy, which has already taken a hit because it’s only been funded this year through short-term measures.

“I think our first obligation to the American people, given the trauma still caused by this crisis and the depth of the damage we still face, is to make sure that we’ve done everything we can to make sure that we’re re-enforcing business confidence, helping get more Americans back to work,” Geithner said, adding that a shutdown would get in the way of those efforts.

As for the CFPB, Geithner – under questioning from Sen. Jerry Moran (R-Kan.), the ranking member of the Appropriations subcommittee dealing with financial services – defended the current setup that allows the bureau to receive funds directly from the Federal Reserve.

Moran announced during his opening statement that he was planning on introducing legislation Tuesday that would force the CFPB to be funded through the congressional appropriations process and would install a five-member commission to head up the bureau.

Rep. Spencer Bachus (R-Ala.), the chairman of the House Financial Services Committee, has introduced legislation in the House that would also place the bureau under a five-member commission.

But Geithner pushed back on that idea, saying that Congress had created an agency both independent and with strong authority. Elizabeth Warren, the special assistant to the president and Treasury secretary for the CFPB, has also pushed back on the idea.  

Geithner told the subcommittee that “the decisions of this bureau are subject to review and approval by the council of financial supervisors and regulators that Congress established.” 

“That creates, in some ways, a stronger set of checks and balances than, I think, exists for many other financial regulators,” he added.

For his part, Sen. Dick Durbin (D-Ill.), the chairman of the subcommittee, indicated in his opening statement that he would fight what he called efforts by Wall Street and House Republicans to undermine the CFPB.

“We’re going to work to make sure this agency has what it needs to start working for consumers from the start,” Durbin said.