Treasury Secretary Timothy Geithner tried to instill some confidence in Europe’s ability to solve the debt crisis, saying that they have both the financial and economic capacity to do so. Speaking on CNBC television today, Geithner said, “There is no chance that the major countries of Europe will let their institutions be at risk in the eyes of the market. There is not a chance.”
Geithner’s comments followed Moody’s announcement that it had downgraded the credit ratings of French banks Société Générale and Crédit Agricole, citing their exposure to the Greek economy. German Chancellor Angela Merkel and French President Nicolas Sarkozy are set to meet with Greek Prime Minister George Papandreou today to discuss ways of heading off a possible default.
“They are absolutely committed and they have the financial capacity, the economic capacity to do what it takes to hold this thing together,” said Geithner, who will attend an informal meeting of EU finance ministers in Poland on Friday. Geithner is expected to urge the ministers to speed up the ratification of changes to their bailout fund. He said that European policy makers are aware that they have been behind the curve and that they must to do more.