WASHINGTON -- Treasury Secretary Timothy Geithner Monday said Europe's financial crisis has already caused significant damage to the U.S. recovery, and urged the continent's leaders to take further steps to shore up their economies.
"Europe is still only at the initial stages of what will be a long and difficult path of reform," Geithner said in remarks prepared for a House Financial Services Committee hearing set for Tuesday.
The Treasury secretary acknowledged that economies at the center of the crisis have made very significant progress thus far in averting a meltdown.
"The most important unfinished piece of the broader financial strategy is to build a stronger European firewall to provide a backstop for the governments undertaking reforms," Geithner said.
Even with reforms, European economic growth is likely to be weak for some time, Geithner said.
A key question for U.S. policy makers is what spillover effect a further deterioration of the Europe situation could have on U.S. firms and the economy.
Regulators have already conducted stress tests on U.S. banks and have repeatedly insisted any direct exposure would be minimal.
Geithner said in his remarks that the U.S. financial system has "relatively little exposure" to the five European countries at the heart of the region's woes--Greece, Ireland, Spain, Italy and Portugal.
Still, he highlighted the importance of U.S. engagement on the issue: "We have significant financial and economic ties to Germany and France and the continent as a whole."
Geithner also responded to concerns coming from Capitol Hill, primarily from Republicans, questioning the U.S. commitment to the International Monetary Fund.
He noted the important role the IMF is playing in trying to stanch the euro-zone crisis, and tried to put to rest concerns that the U.S. plans to seek to put additional funds into the IMF.
"The IMF has substantial financial resources available today," Geithner said, adding that "we have no intention to seek additional U.S. resources for the IMF."
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"Europe is still only at the initial stages of what will be a long and difficult path of reform," Geithner said in remarks prepared for a House Financial Services Committee hearing set for Tuesday.
The Treasury secretary acknowledged that economies at the center of the crisis have made very significant progress thus far in averting a meltdown.
"The most important unfinished piece of the broader financial strategy is to build a stronger European firewall to provide a backstop for the governments undertaking reforms," Geithner said.
Even with reforms, European economic growth is likely to be weak for some time, Geithner said.
A key question for U.S. policy makers is what spillover effect a further deterioration of the Europe situation could have on U.S. firms and the economy.
Regulators have already conducted stress tests on U.S. banks and have repeatedly insisted any direct exposure would be minimal.
Geithner said in his remarks that the U.S. financial system has "relatively little exposure" to the five European countries at the heart of the region's woes--Greece, Ireland, Spain, Italy and Portugal.
Still, he highlighted the importance of U.S. engagement on the issue: "We have significant financial and economic ties to Germany and France and the continent as a whole."
Geithner also responded to concerns coming from Capitol Hill, primarily from Republicans, questioning the U.S. commitment to the International Monetary Fund.
He noted the important role the IMF is playing in trying to stanch the euro-zone crisis, and tried to put to rest concerns that the U.S. plans to seek to put additional funds into the IMF.
"The IMF has substantial financial resources available today," Geithner said, adding that "we have no intention to seek additional U.S. resources for the IMF."
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